What Does A Credit Score Mean for Your Home Loan?

What Does A Credit Score Mean for Your Home Loan?

For anyone that’s thinking of buying a home in Sacramento, CA in the near future, it’s important to keep track of developments in the economy. Things like upcoming rising interest rates are going to have an effect on home lending and how borrowers will deal with the terms and conditions. So this means that more consideration is going to be required, especially if it means owning a home may become more difficult.

One of the things that will be crucial in getting a mortgage in Sacramento, CA successfully approved is your credit score. But if you’re looking into home buying for the first time, or are just unfamiliar with the world of personal finance and credit, what does this have to do you, your loan, and your chances of approval?

What Is Your Credit Score?

Your credit score is a complete history of your credit and loan activity. Once you got a credit card and started paying for purchases that way, you started establishing a credit history and score. Added to your credit score is every time you paid your debt on your card, every time paid late, and every time you missed a payment entirely. Your credit history and score also consists of any loans you may have taken in the past, and how successful/diligent you were in paying those loans back.

However, your credit score is not a single number, or at least, not a universal one. Different companies, such as Equifax, TransUnion, and Experian track your credit activity and come to an average for your credit score in different ways. So depending on which company you go to, your credit score may differ. However, for a lot of mortgage approval purposes, it is your FICO score, provided by the Fair Isaac Corporation that is used to evaluate you.

The Score & You

In general, the better your credit history, the higher your score will be. If you’ve taken out big loans and paid them off diligently, or used your credit card smartly, with bigger purchases that you paid out without any issue, your score will be higher.

At the absolute minimum, to be considered for even lower income loans, you’ll probably need a credit score of at least 500. If you’re looking for specific loans from some of the bigger loan corporations such as Freddie Mac and Fannie Mae, you should probably be in at least the 620 range in order to qualify.

Better Score means More Options

A higher credit score means that you have many more different terms and conditions for the types of mortgage you can apply for and be approved on. This is especially true if that high credit score is also backed up with an ability to put down more for the down payment.

If you’d like to find out more about what your credit score can do for you in getting a mortgage here in Sacramento, CA, then, contact us. We can help you to ascertain exactly what your credit score is, and what mortgages, terms, and conditions are available to you.

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Not A Financial Institution - *American Pacific Mortgage Corporation is not financial service company or licensed tax advisors; the material provided is for informational and educational purposes only and should not be construed as investment, tax and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors. We are not financial or tax advisors, please contact your financial professional for your personal financial situation.