First Time HomeBuyers – Credit Score Basics

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When it comes time to apply for a mortgage, lenders review several factors including your credit score, employment history, debt-to-income ratio (your outstanding debt versus your gross income), the size of the loan, and the amount of your down payment. Although your credit score is just one factor in your application, it could make the difference between being approved or turned down for a mortgage.

Find out your credit score

Credit reports are created by the three major credit card bureaus: Equifax, Experian and TransUnion. Some of the information shown on the reports includes:

  • how many credit cards and loans you have open
  • how long you’ve had your credit cards and loans open
  • history of on-time payments
  • credit limits
  • how much of your available credit you’re using
  • how much total debt you have
  • hard inquiries

Based on these reports, credit scoring models, such as FICO, assign a credit score to you, which can range from 300 to 850. Lenders use your credit score to determine whether to approve you for a mortgage and how much interest you’ll pay for the mortgage. To find out your credit score, create a free account on, or

Improve your credit score (if necessary)

A credit score of 650-699 is considered fair, 700-749 is good, and 750 and above is considered excellent. You can improve your credit score by paying down your debt and making on time payments. Avoid applying for new credit cards or loans right before trying to securing a mortgage and prior to closing on your home as this can lower your credit score by affecting the number of hard inquires on your report and the age of your available credit lines.

Keep in mind that there are still options for those that have less than perfect credit. Realtors have strong working relationships with reputable lenders that can give you in-depth advice and get you pre-approved so that you know how much house you can afford. Contact me at for referrals to local lenders that can help get you one step closer to the place you’ll call home.


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