Many adults who pay rent might be able to afford mortgage payments, but switching from renting to owning is a process that requires planning and forethought. If you’re considering applying for a mortgage, one of the first things you want to pay attention to is your credit report and score. Ask yourself, Is my credit score good enough to buy a house?
Typically, the lower the credit score, the higher the cost. Although borrowers with credit scores as low as 580 could qualify for an FHA loan — a mortgage insured by the Federal Housing Administration — their interest rates will likely be higher than those given to borrowers with credit scores in the 700s and up.
A lender will also look at other things on your report. For example, the presence of collection accounts or a bankruptcy on your credit report could cause some lenders to turn you away, even if you have an average or better score.
If you’re anxious to get your credit into shape for mortgage approval, here are some steps you can take to improve it:
1. Give yourself time
The good news is that past struggles with finances won’t automatically render you ineligible. The bad news is that a few months might not be long enough to correct old mistakes. Six to 18 months of dedication to score improvement should suffice, but the time frame is a little different for everyone.
Read the other 5 steps on GOBankingRates.com!
If your want help with improving your credit situation so you can buy a home, learn how you can start repairing your credit here. You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.
