We talk a lot about credit in our business today, so we wanted to share with you some of the most commonly asked questions about credit. Credit is a very important factor when it comes to buying a house. We are not credit counselors, nor do we have mortgage licenses; however, our work has exposed us to some principles of good credit and how that affects your ability to buy a house.
What’s the lowest score I can have to get financing?
580 is the lowest score nearly all lenders will accept. Some lenders may have their own minimum credit score requirements that are higher than 580, but 580 is the lowest anyone will go.
What score should I have to get the best interest rate?
You should have at least a 640 credit score for a government-insured loan (FHA, VA, USDA) or a 680 for conventional (bank-backed) loans.
What are the biggest factors that affect my credit score?
On-time payments and credit utilization are critical when it comes to your credit score.
Make sure you pay all bills on time. If you often find yourself paying late, an easy fix is setting things up on auto-pay. Not only will this help your score, but it may also save you money by avoiding late payment fees!
You should also keep your percent of credit limit used to at or under 30% (this is your credit utilization). For example, if you have a credit card with a $1,000 limit, you should keep your revolving balance at or under $300.