Every year millions of Americans look to purchase their first home or car. Buying a home or a car is a big decision, and several factors must be considered before looking at your options. The first thing to be considered is credit; what is your credit score? Do you have good credit, do you have bad credit, or do you have credit at all? FICO and Vantage are the two most common types of credit scores used to determine eligibility.
Credit Score Range
With a range of 300-850, a score of 700 or above is considered good credit. Anything above 750 is considered excellent. Lenders and banks use your score to determine if they should extend a loan to you and the interest rate you will pay on that loan, so a good credit score is advantageous.
Minimum Credit Score Needed to Buy A Home
If you’re in the market to buy a home, your credit score is an indication of what you’ll qualify for as far as a loan and the interest rate you will have to pay. The same applies to buying a car or any other major purchase. The minimum credit score needed to buy a home depends on which score mortgage lenders are looking at. 90% of mortgage lenders use FICO to determine whether or not to approve you for a loan and the interest you will be charged.
Factors Determining Loan Approval
Employment, yearly income, and payment history will all be factored into the lender’s decision. Payment history is especially important because most people with good credit have a strong track record of consistently making payments on time. Aside from that, credit lenders will also look at the neighborhood in which you are looking to purchase a home. They do this because there are several outside factors that could play a role.
Home Vs. Car
When it comes to buying a car, having good credit or even no credit may not carry the same weight they will should you decide to buy a home. The ability to take out a car loan is not as dependent upon your credit score. Your credit score does play a role in the process, but other criteria are factored in during the underwriting process. The underwriting process for a car will also factor in current income and what debt an individual is carrying. Although this is the case, having good credit is still the most important part of the process, especially since it’s the first thing they look at.
Contact Good Credit For Life
For information about your credit, contact Good Credit For Life, and we will help you make sense of how your credit score will affect your purchase decisions and the cost to finance. We will also help you understand what it takes to have good credit and build good credit habits. Everyone deserves to live the life to which they aspire. Understanding what constitutes as good credit and building good habits is the best way to leading that life.