What Credit Score do I Need to Buy a House?
As we all know, buying a house is a huge decision, both personally and financially. Just about everyone on Earth will need to get a loan to buy a house. As part of the loan approval process, lenders will look at your credit score to determine your ability to pay back previous debts. But what credit score are lenders looking for?
The rule of thumb that gets said most often is that you need a credit score of 750 or higher to get approved for a loan. A higher number means the bank feels that you are at low risk of missing or defaulting on your payments, as well as being eligible to potentially get a better interest rate. If you have a credit score of 750+, congratulations! If you don’t have the supposed magic number, don’t fret.
According to the latest Ellie Mae Origination Insight Report, more than 53% of people approved for home loans in 2021 had a credit score of less than 750. In addition, 46% of people had a credit score of 650-749. This means that a wide range of credit scores can be eligible for home loans. Talk to your mortgage lender for information about your credit score and how it affects your home-buying ability.
If your credit score is lower than you want, there are many ways to raise it. Two of the top ways are to track and cut expenses and pay your credit card bills or car payments on time and with payments larger than the minimum balance to pay it off sooner.