Credit & Home Buying

home made out of moneyLet's face it, without an acceptable credit score the hunt for a new home will go nowhere. Those seeking to obtain a mortgage will find out immediately that their credit score will play a vital role in establishing an interest rate and the home buying process in general.

Current guidelines require a minimum 620 credit score for an FHA backed loan with interest rates varying by lender and changing daily. The amount that a lending institution will loan a prospective applicant varies based upon individual proven income and calculated debt to income ratios. A buyer with a 700 may not be loaned as much money as a buyer with a 620.

A credit score is a set of equations used by credit bureaus to calculate a number that estimates a borrowers ability to compensate a lender for the loan. Please take note that the three major agencies (Transunion-Equifax-Experian) don't all use the same equations so your score will vary.

Important Points That Affect A Score:

  • Number of accounts paid
  • Negative public records
  • Total number of past due items
  • How long you've been past due/Time since last payment
  • How much you owe on accounts and number of different account types
  • How much revolving credit has been used
  • Time passed since last activity

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