We specialize in making the home purchase or refinance process a great experience; whether this is your first purchase or your 10th, we make it happen for you!
With the median price of homes in Missouri hovering around $188,302, you’ll most likely need to get a mortgage to finance your next home. But is your credit score good enough for a mortgage? Your credit score is one factor that will be used to determine the type of loan you get and the amount of interest rate you’ll pay.
Read on to learn the minimum credit score you need to qualify for a mortgage and the tips you can use to improve your credit score.
What’s the Minimum Credit Rating Required for Mortgage?
The minimum credit rating requirements vary based on the mortgage loan type you want to obtain. Typically, a Federal Housing Administration (FHA) loan requires borrowers to have a FICO credit rating of at least 500. Homebuyers seeking VA loans or conventional mortgage loans are required to have a credit score of 620 or more.
Note: These are just estimates. Ultimately, the credit score you’ll need to qualify for a mortgage will depend on the lender, property type, and your financial history.
The Biggest Little Ways to Improve Your Credit Score
Mortgage interest rates and terms are not created equal. It would be best to qualify for the best mortgage rates and terms available if you had a high credit rating. This leads us to the question that’s on everyone’s mind: How can you improve your FICO score?
Luckily, any credit score can be improved with enough effort — and you may already be familiar with some of the tips you can use to improve and maintain a good credit rating. Here are the top tips we recommend following:
- Check Your Report for Mistakes – The first thing you need to do is get copies of your credit reports from the top credit bureaus. Once you get the reports, take some time to review them and check for any mistakes and errors that could help boost your score if fixed.
- Take Care of Your Debt – Next, come up with a plan to help you take care of your debts. Paying debts shows you can be trusted and know how to manage your finances.
- Pay Your Bills on Time – A missed or a late payment punches your credit score downwards, which, in turn, results in bad payment history. A bad payment history reduces your chances of getting good mortgage rates and terms. If you want to raise your rating, make sure you pay loans, bills, and credit card payments on time. A great trick to reduce your credit consumption ratio involves making extra payments in the middle of your billing cycle.
Tip: To avoid late or missed payments, set up an automated bill payment system with your bank or credit card provider.
Contact the Better Rate Mortgage Team!
If you are looking for a mortgage or have any mortgage-related questions, get in touch with Better Rate Mortgage. We specialize in making the home purchase or refinance process a great experience; whether this is your first purchase or your 10th, we make it happen for you!