Your Credit Score & a Mortgage: What You Should Know | Trusted American Mortgage

If anyone knows the importance of being a homeowner, it is our team at Trusted American Mortgage. We enjoy being able to see the looks on our clients’ faces as they are handed the keys to the home they have been working so hard for in life.

When looking to get approved for the home of your dreams, you need a strong credit score to back you up.

When your credit score isn’t where you want it to be, it can be extremely discouraging. But a lower-than-optimal credit score now doesn’t mean you won’t be able to buy a home in the future. You can take steps to put yourself in better shape.

How Long Does It Take a Credit Score to Recover?

As most people know, the higher your credit score, the better off you are when it comes to the loan rate on your new home.

However, the majority of us have all been in a place where we have made financial mistakes, such as not paying a bill on time or missing a payment altogether. Before you know it, your credit score has dropped.

Fortunately, for issues such as a missed payment, your credit score should see little fluctuation or require quickly.

However, if it is a lot of late payments or other issues with non-payment, it may take longer for your credit score to recover. For bankruptcy, it could take up to 10 years for your credit score to be back where it once was.

What Credit Score Is Needed to Buy a Home?

FICO credit scores range from 300 to 850. In most cases, you need at least a credit score of around 600 in order to purchase a home.

However, the higher the better. The higher your credit score, the better interest rate you will qualify for.

Start Moving That Credit Score Up

Let’s take a look at some ways you can improve your credit score:

For starters, you want to make sure to get a copy of your credit report. You don’t want dings on your credit, especially when you didn’t even make them. Therefore, review your credit report and dispute any and all errors you find ASAP!

Second, you want to make sure you are paying all your bills on time. Make sure you pay at least the minimum payment required by the due date, preferably before.

Finally, you want to reduce your credit utilization ratio, which means paying off all your credit cards as soon as possible. The key, though, is not to close out the accounts you’ve paid off. Doing so will lower your debt-to-credit ratio, so keep them open.

Are you ready to become a homeowner? Or perhaps you are looking to move from one home to another? Give our team at Trusted American Mortgage a call to learn how we can help!