What is the Lowest Credit Score to Buy a House?
You may not think about your credit score a lot, but if you’re about to purchase a home, it is important for you to know your credit score. Lenders use your credit score to assess how reliable you are as a borrower. It’s a way for them to assess your risk level and to assess your ability to repay your home loan.
How Do Banks Rate Credit Scores?
Each lender has its own scale when rating your credit score. The best credit score you can possibly have is 1200. However, this score is extremely hard to have. Most lenders categorize a perfect credit score as somewhere between 800 and 900. Likewise, 700-799 is very good, 500-699 is average, and anything lower than 500 is poor. If your credit score is lower than 500, it may be hard for you to receive a home loan from conventional lenders because of the risk you pose to them. If your credit score is under 500, traditional lenders will view you as a high-risk borrower. They may also assume you’ll have a hard time making your loan repayments.
Can I Still Secure a Home Loan Even With a Poor Credit Score?
While traditional lenders may be reluctant to approve your home loan application if your credit score is too low, some lenders may be willing to offer you a bad credit mortgage. However, it is important for you to note that these bad credit home loans usually have higher interest rates, higher fees, and require a deposit larger than the standard 20%.
There are a number of reasons you may have a poor credit score. Whether you made a few late payments on a credit card, have some defaults, or have other financial hardships, Mortgage House may have a bad credit home loan option for you. Once your credit improves, we can help you refinance to a standard home loan with lower interest rates.