Credit Scores 101: What Credit Score is Needed to Buy a House?
Millions of people long for the American Dream—the dream of homeownership. The ability to paint a room without asking permission from their landlord. They long for the years where they are paying for an asset that will ultimately make them money—an investment unlike any other. Much more than simply a place to stay and a place to call home, owning a home is a milestone in life that says to people, you made it! If you obsess about idea of owning a home one day, then making your vision a reality begins with understanding your credit score. You are not alone when you think, “what credit score is needed to buy a house?” Today, you no longer have to wonder. Today, we will help understand …show more content…
Instead of a systematic, unbiased measure of creditworthiness, the system of old was based on a person’s word—the credit reporter. Responsible for reporting on the notes and experiences of local merchants, when needed, the credit reporter would either vouch for someone or not.
Ultimately, this system proved to be unreliable. For instance, if you made the credit reporter mad, what’s to keep him or her from making a false report?
Dissecting Our Current Credit System
Our current system for determining whether a person is creditworthy is much more complex, yet it’s proven to be effective. The system goes beyond the word of one creditor and factors in many different variables to assign you a credit score that varies depending on how you manage your credit.
Payment History. The biggest factor that contributes to your credit score is your payment history. Your ability to make your payments on time is a leading indicator when it comes to you getting the credit score you need to buy a house.
Amounts Owed. When you owe a significant amount of money to creditors, it’s very likely you may be considered a credit risk, which can reduce your credit score. It’s important to keep in mind that most mortgage companies expect you to utilize only a third of the credit extended to you to be deemed a good credit
Millions of people long for the American Dream—the dream of homeownership. The ability to paint a room without asking permission from their landlord. They long for the years where they are paying for an asset that will ultimately make them money—an investment unlike any other. Much more than simply a place to stay and a place to call home, owning a home is a milestone in life that says to people, you made it! If you obsess about idea of owning a home one day, then making your vision a reality begins with understanding your credit score. You are not alone when you think, “what credit score is needed to buy a house?” Today, you no longer have to wonder. Today, we will help understand …show more content…
Instead of a systematic, unbiased measure of creditworthiness, the system of old was based on a person’s word—the credit reporter. Responsible for reporting on the notes and experiences of local merchants, when needed, the credit reporter would either vouch for someone or not.
Ultimately, this system proved to be unreliable. For instance, if you made the credit reporter mad, what’s to keep him or her from making a false report?
Dissecting Our Current Credit System
Our current system for determining whether a person is creditworthy is much more complex, yet it’s proven to be effective. The system goes beyond the word of one creditor and factors in many different variables to assign you a credit score that varies depending on how you manage your credit.
Payment History. The biggest factor that contributes to your credit score is your payment history. Your ability to make your payments on time is a leading indicator when it comes to you getting the credit score you need to buy a house.
Amounts Owed. When you owe a significant amount of money to creditors, it’s very likely you may be considered a credit risk, which can reduce your credit score. It’s important to keep in mind that most mortgage companies expect you to utilize only a third of the credit extended to you to be deemed a good credit