Do I need good credit to buy a home? | The Hakimi Team

 

Many people ask themselves, what kind of credit paramaters do I need to meet in order to buy a home? How does credit affect the process of homebuying? What credit score DO I need? Well, credit plays a big part in the homebuying process, determining your interest rate or whether or not you are eligible for 100% financing. Depending on what type of down payment you have, your credit score, and whether or not are eligible for VA loans, your credit may play one of the largest parts in buying a new home. Credit scores as low as 580 can get a mortgage as long as they have a down payment, or if it is a VA loan. For the 100% financing options out there, you will need a credit score of 640 or higher. The interest rate for your mortgage will always be lower the higher your credit score is.

Can I get a mortgage with NO Credit?

It will be difficult, but if you can show that you have 4 other sources of paid bills such as housing, lighting, car payment, phone, etc... All with no late payments for a minimum of 12 months, it may just be possible!

 

What are some things that will hold me back when trying to get a loan?

There are several things that can stop you from getting a loan, however, these tend to be more temporary holdings rather than altogether barring. Things like previous foreclosure, bankruptcy, or short sales can cause issues with the process, but all of them have different waiting periods, so give me a call at 303-949-8659 if you need any more information. 

Some general tips for improving your credit:

  • Make sure all of your bills are paid on time
  • Avoid maxing out any of your credit cards
  • Closing your credit line after you pay it off is not good
  • Don't cosign for anyone
  • Don't spend more money than you know you can afford to. 
  • Dont rely on credit repair companies or services, seek advice from people in an industry like ours for good advice, which will also save you money!

How do I establish credit?

Begin by finding a trusted credit card company that reports to all three credit agencies. (Equifax, Experian, TransUnion) Then apply for a credit card with a small maximum of around $300. Keep the balance on that card at around $10 and pay it every month. After two to three months, you should have established credit!

 

 

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