What is a good credit score?
A good credit score is not the only item in question when buying a home, but it is a major one. So, what is a good credit score? Generally, a FICO credit score of 700 is considered good.
The national average credit score has been slowly growing since the 2008 recession. In 2018 the average credit score was 704, the highest it’s ever been.
- Scores 750+ are excellent
- 700-749 is considered good
- 640-699 is considered fair
- 600+ is considered poor
- Less than 600 is considered bad
A perfect credit score is 850, but conventional loans usually accept a credit score of 620 and up, while FHA allows scores as low as 580. However, just because your score may be below that level, don’t throw in the towel. Meeting with a mortgage professional is an excellent way to learn ways to boost your score. They can provide you with guidance and put you on the path to homeownership.
Some ways to improve your credit score:
Keep credit card balances low
The lower your balance, the higher your score will be.
Pay your bills on time
Missing payments can drop your score up to 75 points. Therefore, always try to pay on time.
Don’t close unused cards
If they aren’t burdening you with fees, unused cards can increase your utilization ratio, which is the amount of available credit you’ve used. Additionally, paying things like collections before consulting with your lender, can actually lower your score since that payment will be considered the most recent transaction on a derogatory account.
Have someone with good credit add you as an authorized user
This action brings all the good credit on the main account over to the new authorized user, bumping up their credit. You don’t even need a card of your own for this action.
Butler Mortgage has worked with both first-time and seasoned home buyers for 25 years. Our loan officers do everything they can to make the mortgage process as painless as possible, so you can spend less time worrying, and more time enjoying your home. Call us today at 407-931-3800 with any questions.