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Credit Report

Learn what lenders are looking for and what options you have.

How Does Your Score Stack Up?

Your credit score is a 3-digit number ranging from 300-850 and is a rating of risk. A credit score gives a potential lender some idea of how likely a person is to responsibly repay a loan. Borrowers with a higher credit score tend to get the most favorable lending terms like a lower interest rate because the lender feels less risk. A poor credit score may cause a potential borrower to be turned down or forced to accept a higher rate of interest as an incentive for the bank to take on a riskier investment. All lenders have different requirements when they decide to extend credit to borrowers and a credit score is only one facet they look at. They also consider your employment history and other personal factors.

Everything You Need To Know About Credit Scores

The first question any potential homeowner is asked when talking with a lender is “How good is your credit?”

There is no one perfect number that will guarantee you will get a loan or will get you turned down. Anything above 580 is a possibility and even lower scores are definitely considered with some lenders if you can show a strong employment history. Generally a 640 score is enough to qualify for a home loan. 700 is considered a good score, and anything over 760 is considered excellent.

Lenders use all 3 credit bureaus and will generally take the middle of the 3 scores. Mortgage lenders will often score differently from the consumer credit sites. This is because the mortgage credit score model is slightly different from your consumer score. This is why it’s important to have a mortgage lender check your credit as it can be the difference between qualifying or not.

Your credit score is a snapshot in time. This means once you are able to improve something on your credit, once that’s reported to the bureaus your credit score will improve immediately. The easiest way to improve your score is to pay down revolving debts like credit cards. The larger percentage of the credit limit you’re using on your credit cards, the more it will lower your score.

Many lenders have options for would-be home buyers to get a mortgage even when they have low credit scores. Your lender can give you details on what they can do for you. A 580 credit score can possibly get approved for a loan. A 640 score is almost always good enough to approve for a loan.

The 3 Credit Bureaus Who Monitor Credit Scores

Experian, Equifax, and TransUnion. These 3 agencies receive information from creditors and lenders that reveal all credit transactions, such as credit cards, auto loans, and school loans. This information includes your balance, if you are still paying on the loan, if it is paid off, if the account is closed, and if you made any late payments.

FICO Scores Explained

FICO (Fair Isaac Corporation) first introduced these credit risk scores in 1981 and are determined by:

  • Assessing the borrower’s history of repaying past loans
  • Calculating the amount of debt a borrower is carrying
  • Looking at the length of a borrower’s credit history


A FICO score of:
Below 580 is considered poor
580-669 is considered fair
670-739 is considered good
740-799 is considered very good
800+ is considered excellent

Factors That Impact Your Credit Score

  • Pay your bills on time, every time. If you’re having trouble paying a bill, contact the lender immediately. Don’t skip payments, even if you’re disputing a bill.
  • Pay off your debts as quickly as you can.
  • Keep your credit card balance well below the limit. A higher balance compared to your credit limit may impact your credit score.
  • Apply for credit sparingly. Applying for multiple credit accounts within a short time period may impact your credit score.
  • Check your credit reports regularly. Request a free copy of your credit report and check it to make sure your personal information is correct and there is no inaccurate or incomplete account information. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus Remember: checking your own credit report or credit score won’t affect your credit scores.

Have a few more questions?

Our Loan Experts Can Help

To qualify for an FHA loan, borrowers only need a credit score of 500 and a 10% down payment. With less down payment a 640 and above score is needed. Call your lender to find out all the details.

Borrowers with a FICO score below 580 can still apply to the VA for a home loan. Lenders look at all of your circumstances to determine if a loan is possible and what interest rate may apply.

Although it’s easier to buy a home with a good credit score, less than perfect scores can often qualify for a home. In many cases a 580 score can purchase a home and a 640 score can qualify for an FHA home loan.

You must ensure you’re not still spending more than you can afford each month. You have 2 choices: spend less or earn more. To repair your credit, you must commit to:

  • Pay all of your bills on time
  • Pay down debt (especially credit card debt)
  • Avoid applying for credit
  • Learn to live on a budget

Check over your full credit report. Make sure identity information (Social Security number, spelling of your name and address) is correct. Review the list of credit cards, outstanding debts, and major purchases. If you see any mistakes or questionable items, make a copy of the report and highlight the error. You can dispute inaccuracies on your credit with each of the three credit bureaus.

Before you begin do-it-yourself credit repair, you’ll want to get copies of your full credit reports from all three bureaus (Experian, TransUnion, and Equifax). These reports are free once every 12 months. Consider getting one every 4 months and rotate through the 3 reporting agencies.

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