What Credit Score Do You Really Need To Buy a House?

<article class="post-1158210 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-1158210"><span class="entry-date">August 15, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Credit Score Do You Really Need To Buy a House?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+Credit+Score+Do+You+Really+Need+To+Buy+a+House%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-credit-score-do-you-really-need-to-buy-a-house%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What Credit Score Do You Really Need To Buy a House? Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240815-What-Credit-Score-Do-You-Need-To-Buy-a-House-original.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width=""/>
<p>When you’re thinking about <a href="https://www.simplifyingthemarket.com/2024/07/18/unlocking-homebuyer-opportunities-in-2024/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buying a home</a>, your credit score is one of the biggest pieces of the puzzle. Think of it like your financial report card that lenders look at when trying to figure out if you qualify, and which home loan will work best for you. As the <em>Mortgage Report</em> says:</p>
<blockquote><p><em>“Good credit scores communicate to lenders that you have a track record for properly managing your debts. </em><strong><em>For this reason, the higher your score, the better your chances of qualifying for a mortgage</em></strong><em>.”</em></p></blockquote>
<p>The trouble is most <a href="https://www.simplifyingthemarket.com/2024/07/19/the-biggest-mistakes-homebuyers-are-making-right-now/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buyers</a> overestimate the minimum credit score they need to buy a home. According to <a href="https://www.fanniemae.com/media/52111/display" rel="noopener noreferrer" target="_blank">a report</a> from <em>Fannie Mae</em>, only 32% of consumers have a good idea of what lenders require. That means nearly 2 out of every 3 people don’t.</p>
<p>So, here’s a general ballpark to give you a rough idea. <em>Experian</em> says:</p>
<blockquote><p><em>“</em><strong><em>The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you’re applying for and your lender.</em></strong><em> Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage.”</em></p></blockquote>
<p>Basically, it varies. So, even if your credit isn’t perfect, there are still options out there. FICO <a href="https://www.myfico.com/credit-education/credit-scores" rel="noopener noreferrer" target="_blank">explains</a>:</p>
<blockquote><p><em>“</em><strong><em>While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy</em></strong><em>, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .</em>”</p></blockquote>
<p>And if your credit score needs a little TLC, don’t worry—<em>Experian </em>says there are some easy steps you can take to give it a boost, including:</p>
<h4><strong>1. Pay Your Bills on Time </strong></h4>
<p>Lenders want to see that you can reliably pay your bills on time. This includes everything from credit cards to utilities and cell phone bills. Consistent, on-time payments show you’re a responsible borrower.</p>
<h4><strong>2. Pay Off Outstanding Debt </strong></h4>
<p>Paying down what you owe can help lower your overall debt and make you less of a risk to lenders. Plus, it improves your credit utilization ratio (how much credit you’re using compared to your total limit). A lower ratio means you’re more reliable to lenders.</p>
<h4><strong>3. Don’t Apply for Too Much Credit </strong></h4>
<p>While it might be tempting to open more credit cards to build your score, it’s best to hold off. Too many new credit applications can lead to hard inquiries on your report, which can temporarily lower your score.</p>
<h3>Bottom Line</h3>
<p>Your credit score is crucial when buying a home. Even if your score isn’t perfect, there are still pathways to homeownership. Let’s connect if you want to go over your options with an expert.</p>
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