Your credit score: Mortgage approval facts to know

by Jodie Franklin 04/02/2023

If you're planning to buy a house, managing your credit score is vital. Mortgage lenders use credit scores as a benchmark for qualification, and a lower score can hurt your chances of being approved for a mortgage.

Here are some more details about how credit scores affect your mortgage loan chances:



What should my score be before I apply for a regular mortgage?

The customary loan application process requires a credit score of at least 620. It's possible to get a mortgage with a lower score, but you may have a higher interest rate as a result.



How is your credit score determined for a mortgage?

The loan officer obtains a single credit report containing all three credit report types. The lenders may use your credit score or lower middle credit score to decide if a joint partner applies.



How can a good credit score help with mortgage approval?

Mortgage lenders require higher credit scores because they use it as a way to measure how well you handle outstanding debt. The higher your credit score is, the less risk you pose to their lending. You could end up saving thousands over the life of your loan and capitalize on a lower monthly payment.



Is it possible to get a home with bad credit?

It's possible to get a mortgage with a low credit score, but there are trade-offs to be aware of. With conventional loans, a lower credit score might require a higher down payment or private mortgage insurance.

Other loan options like VA loans or loans offered by the Federal Housing Administration have more flexibility when it comes to minimum credit score. However, these mortgage loans come with other specific requirements for approval.

Maintaining a good payment history and credit report will help you in more ways than just getting a mortgage. However, for a major purchase like a home, it's crucial to have the best possible financial standing before beginning the process.

About the Author
Author

Jodie Franklin

I love helping people find their dream home or sell their house in order to achieve their next goals. I have been working hard for my clients for over 18 years throughout southeast Michigan. I have experienced every kind of transaction there is. 

Helping my community and being involved is extremely important to me. I am Past President of the Michigan Ability Partners board, which helps Veterans and people with disabilities reach independent, self-supported, and satisfying lives. I have also been a member of the City of Milan Tax Review Board and Zoning Board, and involved in Milan Main Street. I have been a major sponsor of events for Michigan Ability Partners, Aid in Milan, Milan Main Street, and many more organizations that work to make our communities better. 

I was 2018 President of the Ann Arbor Area Board of Realtors, Realtor of the year in 2016 for AAABOR and nominee for Michigan Realtor of the Year. I serve on many committees with the local board, state board and was a member of the Housing Opportunity Committee for the National Association of Realtors (2018-19). I am currently serving my second term as a Michigan Realtors Board of Directors. 

I have liked in Milan for over 20 years and enjoy living here with my husband Cliff, son Evan, and dog Rosie.