How much does credit effect one from getting a home loan?

Share This

I dont know how good or bad my credit is but I am worried that credit is a big factor in getting a loan. I heard the banks are holding money only for people with perfect credit…and I know I dont have perfect credit.

5 comments to How much does credit effect one from getting a home loan?

  • Jen  says:

    well, you can get a loan with imperfect credit, you will just get a significantly higher interest rate.

  • OldJimmy  says:

    You’ve heard wrong; your credit doesn’t have to be “perfect”. But it does have to be good to very good.

    It is a major component of obtaining a loan; it illustrates your willingness to pay your obligations in the past on time and as agreed with the creditor. The other key components are your ability to repay the loan (income and expenses), and the value of your collateral (the home you want to buy).

    Almost everyone has the occasional credit card payment that got in a few days after the deadline. One or two of those, over time and only 30 days past due, won’t have a huge impact. Lenders want to make sure this isn’t a habit.

    Go get pre-qualified (not pre-approved) by a mortgage broker. They may only charge you a few bucks to pull your credit report, but they will be able to let you know if there are any problems and also give you an idea of how much house you can afford at this time. You can get pre-approved once you’re ready to shop for a home seriously.

    If you credit isn’t good, but not too bad, consider that you may want to continue renting for a short time. Pay all you bills on time and don’t take on a lot of new debt. This will begin to repair your credit report (and you don’t have to pay anyone to do that for you).

    Home prices are not going to shoot up overnight; it will be a long recovery period so good prices will be there for some time. If I were you I’d take two years to get my credit up to snuff, save as much cash as I could to make a bigger down payment and have a cushion in savings for unforseen events, and keep an eye on the areas you want to live in to keep up with availability and pricing.

  • HRLady  says:

    It depends really how close your credit is to perfect. Your credit score is a significant factor in not only obtaining a home loan, but also in the interest rate you’re able to lock in. It’s not the only consideration taken, but it is a big one. No, your credit doesn’t have to be perfect, but it can’t be terrible either.

    First, order a copy of your credit score and then your credit report from all three major bureaus (the reports are free once a year). Make sure there’s nothing on there that needs to be addressed or fixed, and start making calls for negative reports in which the companies may work with you to make corrections on.

    If your credit score is over 700, you’re in good shape. There are few lenders out there working with people that have a score less than 620, however there are a very very few that actually work with scores that go all the way down to 540 (these are usually FHA secured) and difficult to work through, but can be successful.

  • johnsvolt  says:

    Hi, To qualify for any type of home loan will depend on a # of things, the ability to repay, your credit rating, how much you earn, how long have you been employed, your saving history and of coarse how much money you already owe and what type of loans they are e.g department stores and car loans. Now the thing to remember is each time you apply for credit, it is recorded and if you have apply for a lot, that also can go against you. Now what i would do, is try and find out what your credit rating is before you apply for a home loan if you can afford the cost, the benefit to you is it will not be recorded and if there are any problems, you can check them out if they are correct and if not, you will be able to have them removed. Hope this helps you. Good Luck johnsvolt.

  • Noneya  says:

    You only need a 620 mid score to qualify for an FHA or USDA loan and you will get the same rate as someone with an 800 credit score.

Leave a reply