Buy a Home - Credit PDF Print E-mail
Written by Jessica Lambert   
Saturday, 14 March 2009 20:24
I want to purchase a home, how good of a credit score do I need?
by JessicaLambert


I want to purchase a home, how good of a credit score do I need?

Everyone is talking about the American economy crisis these days: What went wrong, who is to blame and how can we mend the problem?

Basically, it comes down to irresponsible, greedy people who gave too much trust to unqualified loan applicants in order to make some fast money. As a result of this fiasco, there's a lot less trust to go around when you go looking for a mortgage.

Back in the days when bankers were busy creating this increasingly dire economic crisis, your credit score, if above a certain mark (around 620-650 by most estimates) ensured you both qualified for and received interest rates on the money you borrowed.

Times were good back then. Getting approved was quick and easy. Loan officers did not probe carefully or too deeply in to your financial or credit background. So long as you had that minimum credit score, your next move was to decide on new carpets.

I remind you of this to show how things have changed for you, the Prospective Homeowner. The minimum credit score of 620-650 is no longer the key to home ownership like it was in the past.

While scores in these ranges may still constitute an approval, it's typically a much less desirable one, requiring more money at closing, in fees and over the long term of the loan in interest rates. To be excused from these expensive options, your credit score will need to find its home in the 720-750 range.

As I mentioned, lenders increased these problems by extending too much trust. Trust is still obtainable, but only after great judgment of a variety of financial information on your loan application.

If you hope is to be approved for a mortgage with reasonable terms, you may want to examine your credit report and clean it up a bit. Often credit reports contain errors or items which can be deleted, with a little work.

Having a good deposit also encourages trust in your commitment to own a home. Finally, creditors will examine your debt to income ratio. This can be improved by paying down debts, earning more, or ideally both.

In conclusion, it is crucial to realize that having a certain credit score is not the only thing youll need for getting a home. Times are lean, trust is little and judgment is high. You can enhance all the factors involved with a bit of time, understanding and effort. Home ownership is a very justified goal and we wish you the best in your pursuits.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

For a free credit consultation call 1-866-246-7311. To learn how to remove a charge off or to learn how to remove bad credit from debt collectors such as LVNV Funding.