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2 Essential Tips to Memorize before Buying a House in Houston

Credit or FICO scores usually stay between 300 and 850. Now, the mortgage programs impose certain rules that only allow people to carry credit scores within a specific range. The range keeps on varying from one lender to another. One lender might allow 620 credit scores for an FHA loan; on the other hand, another lender might be ready to offer the loan program against 580 credit scores. Even though you do not need perfect scores to get through a mortgage application, you might need to work on some areas.

Why? Buying a house with 580 credit score inHouston is possible but prospective homebuyers have more than 740 scores. Yes, the minimum credit score requirements differ, but mortgage options become stipulated. In any case, if you are an active military service member or veteran, VA loans are a great option. Either way, higher credit scores ease your road to application and help in landing a better interest rate.

So, in this article, we share the useful tips that you must use for making it to 700+ scores from 580.

Squash the Idea of Big Purchases  

New debt comes with new risks. If there is a slight chance of failing to repay debts, do not apply for new credit or postpone the thought of buying a new car. The credit scoring model is affected by the new debts. In this case, a credit check along with a loan application might cause a drop in scores. FICO scores also go lower if you apply for a new mortgage again. However, the credit score is likely to recover within months but avoiding the scope is the best.  Also, lenders oversee your DTI ratio, too. In case you choose to pay in cash, make sure you do not go for non-emergency purchases. Lenders consider a borrower’s savings to assess financial capability.

Make a Habit of Paying Each Bill on Time

Payment history plays a significant role in shaping your credit scores. Unfortunately, every borrower is not aware of the negative aspects brought by late payments. If you miss paying on time, your credit score will go down. Making payments on time is often a challenge for many people. That’s why automated payments can save you from the woes of late payments and low scores. Set alarms, mark on the calendars – do whatever it takes to make sure you pay on time. Once you start following a system, your credit scores will not be affected by payment history. It is always a red flag when a late debt payment exists for more than 12 months. It means you will be labeled as a less risky borrower and avoid paying a higher interest.

In Conclusion

There are numerous ways to pull your credit score from 580 and get a decent interest rate. You can also ask your lenders for further suggestions and work on your credit report. Make sure your best credit profile comes forward so that lenders also take you as a prospective borrower.


Joan Galardo


Residential Commercial Mortgage Loan Originator at Clear Lending.

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