There are several important numbers you need to know when you’re trying to buy a new home. You need to know how many square feet the home has, what your interest rate is, how much your payments will be, and even the house number of the new home. Before getting too concerned about any of these numbers, however, there’s a number that’s more important that you need to be concerned with: your credit score.
Understanding your credit score will help you to be prepared for the process of applying for a mortgage. Knowing where your creditworthiness lays will help you as you negotiate for the best mortgage terms possible. While your credit score is only part of the equation, it’s an important part and the place where most mortgage lenders begin.
Your credit score takes the form of a number. This number is usually somewhere between 330 and 800. The lower your credit score is, the harder it will be for you to get a mortgage for your new home. Here is a brief look at the credit score ranges, and how new home lenders see them:
- 330-619: Your credit score is very low, and you will have a hard time finding any new home lender to give you a loan.
- 620-659: Your credit score is low, but you may qualify for certain types of financing, such as sub-prime financing.
- 660-720: Most people fall into this category. Your credit score is average, and you should qualify for prime financing.
- 721-750: Your credit score is near the top, and you will get a rate lower than the prime rate.
- 751 or above: Some lenders may offer even lower rates to the top few percent of people with a credit score this high.
You can get your credit score from two of the credit monitoring agencies, TransUnion and Experian. The fee is usually $10 or less. There are also third-party providers who will provide access to your credit score.
Your credit score is based on your overall credit report. If you’re applying for a new home mortgage, you should consider getting a copy of your credit report and taking steps to insure there aren’t any errors on the report that could bring down your credit score.
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