When you're considering buying a home, your credit score plays a crucial role. It's essentially your financial report card that lenders use to determine whether you qualify and which mortgage options are best for you.

““Good credit scores communicate to lenders that you have a track record for properly managing your debts. For this reason, the higher your score, the better your chances of qualifying for a mortgage.”
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— Mortgage Reports

Many buyers tend to think they need a higher credit score than they actually do to purchase a home. A report from Fannie Mae reveals that only 32% of consumers are aware of what lenders typically require. This implies that almost 2 out of 3 people don’t have a clear understanding of the credit score needed.

Here’s a general estimate to give you a sense of things. Experian mentions:

““The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you’re applying for and your lender. Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage.”
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— Experian

It really depends. Even if your credit isn't great, you still have options. 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 . . .”
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— FICO

If your credit score could use some care, there’s no need to stress—Experian has shared some simple steps you can follow to help improve it, such as:

1. Pay Your Bills on Time

Lenders are interested in seeing that you consistently pay your bills on time. This covers everything from credit cards to utility and cell phone bills. When you make timely payments, it demonstrates that you are a responsible borrower.

2. Pay Off Outstanding Debt

Paying off your debts can reduce your overall financial burden and make you a safer bet for lenders. It also enhances your credit utilization ratio, which reflects how much of your available credit you’re using. A lower ratio signals to lenders that you’re a more trustworthy borrower.

3. Don’t Apply for Too Much Credit

It may seem like a good idea to open several credit cards to boost your score, but it's wise to take a step back. Applying for too many new credit cards can result in hard inquiries on your credit report, which can cause your score to drop temporarily.

Bottom Line

Your credit score plays a key role in the home buying process. However, if your score isn't ideal, don't worry—there are still options available to help you achieve homeownership.

Partnering with a reliable lender can provide you with valuable insights into how your credit score might influence your home loan.