What Philly Homebuyers Should Know About Credit Scores

Philly Homebuyers

Credit information for Philly homebuyers

Credit scores. While not exactly what we’d call a fun topic, it’s a necessary topic if you’re thinking about buying a Philly home! Your credit score could determine if you qualify for a loan, and if you do qualify, it could determine how much you’ll pay each month. It’s worth paying attention to! Our Stephen Sells Philly real estate team is here to fill you in.

The first thing to realize is that the higher your credit score is, the better, from the eyes of a mortgage lender! This number sums up your credit history and gives you a grade on how reliable you are to lend money to. A low score could indicate you’re a risky borrower.

A good credit score is one that is 740 or over, while a score over 760 is ideal. If you’re putting 20 percent down on a Philly home, 740 usually suffices, but if you’re putting less down and need PMI (private mortgage insurance), 760 or higher would be ideal. Because while you may qualify for a mortgage, a higher credit score could mean a lower interest rate and a lower amount of PMI.

If you go with an FHA loan, you could obtain a mortgage loan with a credit score as low as 580 with 3.5 percent down, or lower scores with a down payment of 10 percent. The bottom line is that you have options as a Philly homebuyer! If one lender denies you a loan, it’s worth checking with other lenders to compare offerings. It’s wise for all buyers to do this, even if the first lender approves you.

Is your credit score still not high enough? Spend time this holiday season improving it, so you’ll be ready to buy a Philly home by next year! Here are a few steps you could take to improve it:

  • Check your credit reports for errors, and if you find any, work on getting them fixed. This could take time, but could have a big impact on your score.
  • Pay down debt! This is the best way to improve a score, as 30 percent of your score has to do with your credit utilization ratio. Try to spend less than 30 percent of your available credit limit.
  • Make payments on time. All of them! Set up automatic withdrawals for your bills and loan payments if possible, to ensure that all of your bills get paid on time.
  • Ask for late payment forgiveness. Your creditor will usually offer you at least one forgiveness if you’re usually on time with your payments. It’s worth a shot if trying to increase your credit score fast.

If you have questions about mortgage loan approval or the home-buying process, contact our Stephen Sells Philly real estate team! We will either answer your questions or point you in the direction of a local mortgage professional. When ready to buy, we’re here to help guide you through the process and find the perfect Philly home to fit your needs! Don’t hesitate to contact us, even during the holiday season!

Stephen Ferguson, REALTOR

Stephen@StephenSellsPhilly.com | 267.377.9344 Mobile | 215.558.2429 Office
Follow me on Twitter @SSellsPhilly | www.StephenSellsPhilly.com
Berkshire Hathaway HomeServices, Fox and Roach, REALTORS | 215.546.0550
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