Getting Good Credit Scores For Buying a Massachusetts Home
Author Bill Gassett owns Maximum Real Estate Exposure.
Is owning your first home in Massachusetts one of your goals? Does your current credit score need work? If you answered yes to these two questions, you would be on the right track after reading the advice provided.
Buying a house is an essential step for many. Getting into home ownership isn't always easy, as your financial past haunts you.
Many buyers wonder what is a good credit score for buying a house. It's a great question because credit scores heavily influence the terms a mortgage lender will provide their borrowers.
Striving to increase your credit score as much as possible is a worthwhile goal. Let's look at what credit score is needed to buy a home and what scores will provide the best mortgage terms.
It's essential to realize these are two different things.
What Are Your Credit Scores?
Credit scores are numerical values used to assess the creditworthiness of a potential borrower. It determines the likelihood that a borrower will be able to repay a loan.
Credit scores range from 300 to 850 and are calculated using a variety of factors, including payment history, outstanding debt, credit utilization ratio, and more. A higher credit score indicates a lower risk of default, making it easier for borrowers to obtain a loan or line of credit.
A lower credit score, on the other hand, can indicate that the borrower is at a higher risk and may be more difficult to qualify for a loan. Additionally, higher credit scores often result in more favorable terms, such as lower interest rates and better mortgage terms.
What Are Credit Score Ranges?
The following are the credit score ranges for borrowing money.
- 300-579: Poor
- 580-669: Fair
- 670-739: Good
- 740-799: Very good
- 800-850: Excellent
Credit scores between 300 and 579 are considered in the ‘poor’ range. A score in this range could indicate to lenders that you are a higher-risk borrower and may be more challenging to qualify for a loan. If you fall in this range, reviewing your credit report for any potential errors or incorrect information that could impact your score is important.
Credit scores between 580 and 669 are considered in the ‘fair’ range. A score in this range indicates to lenders that you may have a few blemishes on your credit report, but you can still qualify for some loan products.
It is essential to review your credit report and work to reduce any negative items, if possible.
Credit scores between 670 and 739 are considered in the ‘good’ range. A score in this range indicates to lenders you have a good credit history. You will likely be a less risky borrower. You may also qualify for better terms and lower interest rates.
Credit scores between 740 and 799 are considered in the ‘very good’ range. A score in this range indicates to lenders that you have a very good credit history and could likely qualify for most loan products. Getting the best terms from the lender is highly likely.
Finally, credit scores between 800 and 850 are considered in the ‘excellent’ range. A score in this range indicates to lenders that you have an exceptional credit history among borrowers. You'll likely get the best the lender has to offer.
How to Improve Your Credit Scores to Buy a House in Massachusetts
Improving your credit score to buy a house in Massachusetts is possible with some determination and hard work. Here are some steps to take to get your credit score in the range to qualify for a mortgage loan:
1. Make all loan payments on time. Late payments can greatly impact your credit score and stay on your report for up to seven years. To avoid this, make sure you pay all of your bills on time.
2. Reduce loan balances. High loan balances can be difficult to manage and harm your credit score. Try to pay down your balances as much as possible to improve your score.
3. Get current with any past-due accounts. If you have any accounts in collections, get them paid off as soon as possible. This will help improve your credit score and make you a more attractive borrower.
4. Don’t apply for new credit. Applying for new credit cards or loans can hurt your credit score. Try to avoid opening new credit accounts unless necessary.
5. Use Credit Karma to better your financial standing. Credit Karma is a free tool that can help you track your credit score and provide you with tips to improve it. Use this tool to stay on top of your credit score and make improvements where possible.
Following these steps over time can quickly improve your scores in buying a home or condo. FHA loans are an excellent option to explore as they offer low down payments and lower credit score requirements.
Final Thoughts on Credit Scores to Buy a House
By following these steps and being diligent about your credit score, you can improve your credit score and be better positioned to qualify for a loan to buy a house or a condo in Massachusetts. Good luck!
Did you enjoy this advice on how to get a good credit score to buy a house in Massachusetts? See other real estate articles on NewsBreak for more timely tips and advice. Bill often writes about general real estate, mortgages, finance, moving, and home improvement.