Homeownership is one of the biggest financial goals for just about anyone, and there are many steps one must take to own their dream home. One of the most critical steps is building a good credit score.

The right credit score can set you up for the possibility of true home ownership. However, it can also save you many thousands of dollars on your costs when you get there.

Today, we’re going to look into why credit matters so much when buying a home.

Lenders Want To See a Good Credit Score

 Most any lender will want to see a credit score that is at least 620 if you are a potential home buyer. However, it’s also important to note that there are many home loans that are government-backed, and many of these have lower credit score requirements.

An FHA loan, for example, which is backed by the Federal Housing Administration, has a 580 credit score minimum. If you can get a VA loan, which is backed by the U.S. Department of Veteran Affairs, they don’t even have a set minimum requirement.

While you might be able to obtain a home based on these minimum credit score requirements, it is most often the case that home buyers have much higher credit scores. In 2021, the median home buyer had a credit score of around 786.

Your credit score is one of the most critical parts of your mortgage application. If you don’t have a good credit score, you might find it difficult to get a lender who is willing to work with you.

Why Is Credit So Important For Homeownership?

Reduce Your Interest Payments

 Beyond the requirements that a lender may have, a good credit score can make your home ownership far more affordable in the long run. Being able to tap into a mortgage with the lowest interest rate possible is the best-case scenario. Even having a mediocre credit score can leave you with exorbitant interest rates to deal with.

You could end up saving many thousands of dollars over the course of your mortgage.

What Else To Look Out For

 While having a good credit score is crucial for potential homeownership, there are a few other things that you’ll want to look out for before starting your mortgage application process.

Whoever is lending to you will want to see your employment history, income, and your ability to take on a new payment each month. It’s imperative that you make sure you have these things in order and are more than competent enough to take on home ownership.

Final Thoughts

If you’re thinking about applying for a mortgage loan in the near future, consider using tradelines to potentially boost your score. Tradelines make it easy to acquire the score you need to make your financial dreams a reality.

 If you have any further questions regarding tradelines and how they can help you boost your credit score, make sure to get in touch with us here at Personal Tradelines to learn more! We look forward to helping you reach your financial goals.