Knowing your credit scores is a good idea for many reasons. Everything from qualifying for a credit card or an auto loan to getting utility services or renting an apartment can be impacted by how good your credit score is. Knowing the credit score needed to buy a house is an important first step in your home ownership.
Your credit score helps determine the interest rate and other costs you pay on a mortgage loan. If your credit scores are high, it tells lenders that you’ve paid your credit card bills on time, haven’t “maxed out” your credit cards, and so on. Lenders see you as likely to pay your loan payments consistently and on time. They see you as a low-risk investment and offer you a lower interest rate and other costs on your loan.
If your score is lower, lenders see you as a risky investment. And, if they approve you for a loan at all, will charge you a higher interest rate in exchange for taking on your perceived risk.
How Lenders View Your Credit Score?
Your credit score is a number that represents where your credit profile stands. Different credit models give slightly different scores, but each is based on certain factors that look at how you do and have used credit—credit cards, loans, etc.
What Credit Score Do You Need to Buy a House?
Most lenders have a baseline credit score they use to approve or deny mortgage applicants. Any score in the 700s or above is considered excellent and will most likely get you a loan with the lowest interest rate.