What Does My Credit Score Say

Dated: 11/03/2018

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If you’ve just bought a new home, chances are you spent quite some time worrying about your credit score. After all, your credit score affects your ability to get a mortgage, and the interest rate you’ll pay on that mortgage.So what happens to your credit score after you’ve purchased a home?

That’s a complicated question with a complicated answer. You’ll likely start seeing minor dings in your credit score as soon as you begin applying for mortgages. When you apply for pre-approval, lenders will pull your credit score. When the lenders do perform a hard credit pull, it tells the credit scoring algorithm you’re looking for new credit, which will cause a small drop in your credit score. 

The Federal Housing Administration, or FHA, requires a credit score of at least 500 to buy a home with an FHA loan. A minimum of 580 is needed to make the minimum down payment of 3.5%. 

However, many lenders require a score of 620 to 640 to qualify.With a conventional loan for a house that's backed by Fannie Mae or Freddie Mac, for example, the minimum score required is set at 620.

 But the lowest credit score to buy a house with an FHA loan is 580. ... As a generalization, the average credit score to buy a house is 600 or above.Mortgage interest rates with a 700 credit score. 

Generally, you need a credit score of 620 or better to qualify for a conventional Fannie Mae loan or an FHA loan with a 3.5 percent down payment. If you're interested in a no-down payment USDA loan, the minimum credit score rises to 640. 


Ways to Improve a Credit Score in 30 Days 

  • Correct any errors on the credit report

  • Contact creditors that are reporting inaccurate late payments or defaults 

  • Become an authorized user

  •  Raise your available creditNegotiate 

  • Make minimum payments on time 

  • Reduce debt-to-income ratioHave a good mix of debtThe second option for a no down payment loan is a USDA loan. 

If coming up with a down payment is a struggle, an alternative to buying a house with no money down is an FHA loan. The FHA does not offer a no-money down loan. 

However, they do allow for loans with a down payment as low as 3.5% of the home's purchase price.

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