Whether you’re planning to purchase your first home or are a seasoned home buyer, a credit score is important. Mortgage lenders evaluate credit scores to determine whether or not you will make your payments on time. Having a high credit score helps you get the best possible interest rate. If your score is low, you might need to put more down or pay more in interest.
What Credit Score Do I Need to Get a Mortgage?
Mortgage lenders also have specific rules about what credit score is needed to qualify for a mortgage. The requirements vary depending on the type of loan you are applying for cash out refinance. If you’re applying for a conventional loan, you will usually need a credit score of at least 620. If you’re looking for a jumbo loan, you will need a score of 700 or more.
Whether you are applying for a conventional or a government-backed loan, the credit score you get will play a big role in determining your loan terms. A low credit score can affect your interest rates, so it’s important to build it up before you apply for a mortgage.
Whether you have a low or a high credit score, the best way to get your score up is to address any derogatory marks on your credit. This could include bankruptcies, late payments, or delinquency. Getting your debt under control before you apply for a mortgage will help raise your credit score.
In addition to your credit score, lenders may also ask for other factors that show your financial health. For example, lenders’ mortgage broker may be more interested in your debt-to-income (DTI) ratio than in your credit score.