When buying your home, one of the most important factors is your credit score. This number, usually ranging from 600-800+, significantly impacts your ability to get a mortgage and a good interest rate.
In this post, I’ll walk you through how to find your credit score, what different types of loans require, and how your credit score plays a vital role in the home-buying process.
How to Find Your Credit Score
Finding your credit score is easier than you might think. Here are two of the most common, free, ways to find your credit score.
1. Check with Your Bank or Credit Card Company. Many financial institutions now offer free credit scores as part of their services. Log in to your online banking account and see if it offers you a credit score, credit snapshot, or something similar. Different banks will name it slightly differently. Trust, for example, partners with Experian to give you a credit score for free, along with simplified explanations for how different things will impact your credit.
2. Annual Credit Report: This website allows you to request a free credit report from the three major credit bureaus once a year, giving you a comprehensive overview of your credit history.
What Credit Score do you need to buy your home?
Different home-buying programs have varying credit score requirements. Here’s a breakdown of what you can expect:
Conventional Loans: Generally, the minimum credit score you need for a conventional loan is around 640.
FHA Loans: These government-backed loans are designed to help lower-income and first-time buyers. FHA loans sometimes have more lenient credit requirements, but that varies.
Jumbo Loans: If you’re looking to finance a home that exceeds the conventional loan limits, you’ll likely need a jumbo loan. The minimum credit score for these loans is typically around 700 due to the additional risks involved.
VA Loans: VA loans can be an excellent option for those who have served in the military. While the VA doesn’t set a specific minimum credit score requirement, most lenders prefer a score of at least 640.
Your credit score is crucial in figuring out your loan. It is really important to understand how it works and what your credit score is. Remember, improving your credit score can open up more opportunities and better rates, making staying informed and proactive about your financial health worthwhile. Happy home hunting!
