What Credit Score Do I Need to Buy a House?

With so much talk about the credit crunch and so called sub prime if you are wanting to buy a house your credit score has never been so important.

As a direct result of the credit squeeze, mortgage lenders have had to tighten their lending criteria significantly meaning that they now are paying much more attention to a the credit scores of borrowers before issuing home loans.

Home Line Of Credit

What credit score do I need to buy a house?

What Credit Score Do I Need to Buy a House?

It is hard to say exactly. Much will depend on the specific lender in question as well as the amount of finance you need and the size of you down payment or deposit. What is certain is that the better the credit score the easier you will find it to get finance. In addition a better credit score will also mean you will be able to get cheaper finance on your home loan, meaning you monthly repayments will be minimized.

The average credit score in America is about 690. If you have a score higher than this then you should have no problems landing a competitive mortgage deal. If you have a credit score of lower than this then you will most likely still be able to find finance but it will be more expensive with a higher interest rate. If this is the case it is crucial you try to improve your credit score.

Ways to raise you credit score

# 1 The first and most obvious step is to try to ensure you pay all of your bills on time This should help prevent your score deteriorating anymore and over time will help it rise. Ensure you do not miss any monthly payments.

# 2 If you have any surplus income consider overpaying some of your debts. Start with the most expensive (the ones with the highest rates of interest). Over paying debts will improve the ratio between the amount of debt you have and your credit limits. Improving this ratio will greatly improve your credit score.

# Try to avoid any unnecessary debts. Buying a home is a big financial commitment. Be sure to wait until you have moved in and found the mortgage repayments are affordable before taking on any other additional debts.

What Credit Score Do I Need to Buy a House?