Your credit score plays a significant role in big financial decisions, and few are bigger than buying a home.
Most mortgage programs have a minimum credit score requirement you’ll have to meet to qualify. Beyond that, your credit score can also influence your interest rate and terms. The better your score, the better those rates and terms tend to be.
Are you getting ready to purchase a home? Here’s what to keep in mind about your credit before you do.
You may encounter both hard and soft credit inquiries. A soft credit pull usually happens when you apply for prequalification, and it won’t impact your credit score. A hard credit pull, however, happens when you fill out a loan application. This is a more detailed look at your credit history and can ding your credit score by a few points, at least temporarily.
Lenders look at a specific type of credit score. You likely have several slightly different credit scores (for example, VantageScore and FICO). Mortgage lenders typically pull your tri-merge report, which shows your FICO score with each of the three major credit bureaus — Experian, Equifax and TransUnion.
You have the power to improve your credit score. While it does take time, you can increase your score by reducing the balances on your loans or credit cards, disputing errors on your credit report and staying current on your bills. Avoid opening new accounts, particularly leading up to your mortgage application.
Speaking with a mortgage lender can help you better understand your credit score and other parts of your application.
Get in touch for a trusted lender recommendation or other homebuying assistance.
