Credit is an essential part of the economy. Without credit, lenders would have no scale by which to create lending standards that determine who should receive credit and who should not. Your credit score is based on your debt repayment history; so, if someone is consistently late on making payments their credit score will be impacted negatively.
It is important to note that to establish credit, one must borrow money. For many this is difficult because they pride themselves on not ever having a credit card or taking out a loan. Yet, when it comes to making a purchase as large as a house, borrowing money makes more sense rather than saving money for decades. It may be beneficial, if you find yourself in these circumstances, to open a credit card and promptly pay it off, building credit along the way.
But let’s get to our original question—what kind of credit score is needed? To fully get an answer to this question, your best bet is to speak with a mortgage banker because the minimum credit score required is affected by other factors, factors such as, how much money you have saved for a down payment, the loan amount, or even where your home is located. For example, the FHA loan has a minimum requirement of 580 but other factors must be met to qualify for that loan while other loans require a 620+ credit score in addition to the other qualifying factors. Bottom line, the higher your credit score the better prepared you will be for qualifying for a mortgage.
Learn more about qualifications for mortgages on our first-time home buyer’s page.
