The Truth About Credit Scores and Buying a Home

Your credit score plays a big role in the homebuying process. It’s one of the key factors lenders look at to determine which loan options you qualify for and what your terms might be. But there’s a common myth about credit scores that may be holding some buyers back from becoming homeowners.

The Myth: You Need To Have Perfect Credit

According to Fannie Mae, only 32% of potential homebuyers have a good idea of what credit score lenders actually require. That means nearly two-thirds of buyers don’t know what lenders are looking for—and most overestimate the minimum credit score needed.

As a local lending expert at Lend Mortgage Solutions, a local mortgage brokerage, I’ve worked with many buyers who assumed their credit wasn’t high enough to qualify. But the truth is, you don’t need perfect credit to buy a home.

The Reality: Perfect Isn’t Necessary

Your credit score is important, but there’s no single “cutoff score” that applies to all loans. Different loan programs have different requirements, and lenders evaluate borrowers based on a variety of factors—including income, employment history, and debt-to-income ratio.

To see the average credit score required by loan type, check out the graph below:

There is no set cut-off score across the board. As FICO explains:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .”

So, even if your credit score isn’t as high as you’d like, you may still be able to buy a home. The key is to work with a trusted local lender who can walk you through your financing options and help you understand how your credit score impacts your loan terms.

Simple Tips To Improve Your Credit Score

If you want to boost your score before applying for a home loan, here are a few expert tips from Experian and Freddie Mac:

1. Pay Your Bills on Time
This includes everything from credit cards to utilities and other monthly payments. A history of on-time payments shows lenders that you’re a responsible borrower.

2. Pay Down Outstanding Debt
Reducing your overall debt improves your credit utilization ratio (how much credit you’re using compared to your total limit). This also makes you a lower-risk borrower, increasing your chances of better loan terms.

3. Hold Off on Applying for New Credit
Opening new credit accounts might seem like a good idea, but too many applications in a short period can hurt your score. Instead, focus on managing your existing accounts.

If you want to open up your options a bit more after talking to a lender, here are a few tips from Experian and Freddie Mac that can help give your score a boost:

Bottom Line

Your credit score doesn’t have to be perfect to qualify for a home loan. The best way to know where you stand? Work with a trusted local lender to explore your options.

As your local lending expert, I’ll walk you through the pre-approval process, help you understand your loan options, and guide you on improving your credit score if needed.

Let’s talk about your homeownership goals and get you pre-approved today!

Rya Jacobsma – Your Local Lending Expert
Lend Mortgage Solutions – Your Local Mortgage Brokerage
209-342-7385
Rya@LendMortgageSolutions.com
www.LendMortgageSolutions.com
NMLS 2299837 | DRE 02168816

Let’s turn your homeownership dreams into reality!

‍