Your Credit Score

Credit scores, commonly referred to as a FICO score, largely determine whether you’ll qualify for a home loan and what interest rate you’ll be charged.

In general, FICO scores range from 300-850, and to qualify as a first time home buyer, you’ll need a minimum score of 620 (or 580 through certain first time home buyers programs).  By raising your credit score 25, 50, or 100 points, you can improve the odds of getting a mortgage at a competitive rate.

If your credit is spotty, that doesn’t necessarily prevent you from buying your first home.  If you have no credit history, you still might be eligible for a home loan and the $8,000 first time home buyer credit.

Credit scores are calculated according to:

• Your credit history.
• Your track record of making payments on time.
• The types of credit you’ve used.
• How much you owe.
• How long you’ve had credit.
• How much new credit you’ve tried to obtain recently.

To keep your FICO score as high as possible:

• Make your payments on time.
• Don’t skip any payments.
• Keep low balances on your credit cards.
• Avoid department store credit cards.
• Avoid other specialized credit cards.
• Check your credit reports at least once a year to make sure the information on them is accurate.

For a full explanation of credit scores and how to improve your score, visit myFICO.  myFICO also provides a wealth of information on loan types, mortgage calculators, info on closing costs, etc.