What’s your credit score?
Wait. Don’t tell me.
But let’s talk about how your credit scores affect your ability to get a mortgage—and how they affect your interest rates.
Can You Get a Mortgage With Your Credit Score?
Every lender has different requirements when it comes to lending money to buy a home—and that means what one bank won’t accept, another will (and happily, too).
The bottom line is that each lender has its own standards. Unless you’re buying a Grand Junction-area home with a VA loan, which doesn’t require a minimum credit score (instead, the VA requires lenders to look at your entire financial situation and forbids them from using credit as the sole determining factor in whether to lend to you), you’re going to have to make sure your credit score is up to par.
If not, you may have a tough time even getting approved for a mortgage… let alone scoring a great interest rate.
Most lenders look for a credit score of 600 or more. The higher your score is, the better interest rates you’ll be eligible for.
How is Your Credit Score Calculated?
Five key factors are at play when the three major credit bureaus—Equifax, TransUnion, and Experian—are determining your credit scores:
- Your payment history amounts to about 35% of your score.
- The amount of your debt amounts to about 30% of your score.
- The age of your credit history amounts to about 15% of your score.
- New lines of credit in your name amount to about 10% of your score.
- The types of credit you have in your name amount to about 10% of your score.
Credit: The Good, the Bad, and the Ugly
The lowest possible credit score is 300, and the highest is 850. Most people are somewhere in-between on that spectrum. Lenders typically break these scores into ranges to help them determine whether to give you money, and they look like this:
- Good: 740 to 850
- Fair: 670 to 739
- Low: 580 to 669
- Subprime: 300 to 579
How Can You Find Your Credit Score?
Before you apply for a mortgage, it’s a good idea to find out what your credit score actually is.
Thanks to the Fair Credit Reporting Act, each of the nationwide credit reporting companies (Equifax, TransUnion and Experian) must give you a free copy of your credit report every 12 months upon request. You’re also entitled to a copy of your report if someone denies you credit (even if you’ve already gotten your free credit report for the year).
Visit AnnualCreditReport.com to get your free copies. (That’s the only site endorsed by the Federal Trade Commission for free credit reports.)
You can also call 877-322-8228 or complete an Annual Credit Report Request Form from the FTC and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Are You Buying a Home in Grand Junction?
If you’re thinking about buying a home in Grand Junction, Fruita or any of the surrounding communities, we’d love to help you.
Call us at 970-765-4135 or get in touch with us online to tell us what you want from your next house. We’ll help you find it.
In the meantime, feel free to browse our: