and without any further ado...
Am I Ready to Buy My First Home - Part 4
The Magic Number, Do you know yours?
If you don't have the money to buy your home flat out, chances are you're going to some sort of lender to get the funds. In the past, especially in the mid-200's, getting credit extended to you wasn't an insanely difficult thing to do. Since the housing crash in 2008 though, it has been quite a bit harder to qualify for good loans. We've discussed a few of the things banks look at, your job and income situation, your cash reserves. Today, we'll focus on another big factor for the banks: Your credit and your debt.
You've probably heard of a FICO score before now. If you keep you bills payed on time, show you can handle debt responsibly, and keep your debt limits down, you'll have a higher score than someone who can't do those things. You're shooting for a perfect score of 800 and the closer you can get to that, the more comfortablle lenders will feel with entrusting their funds into your hands. Scores under 620 are considered too risky by most lenders these days, and quite a few frown on anything below 650. I highly suggest checking your credit report a few times a year just to make sure nothing looks unusual. It's not uncommon to find erroneous, or outdated information on a credit report and the faster you can have those items fixed or removed, the closer you are to getting into your first home.
Don't despair if your credit score isn't up to snuff right now, there are a number of strategies that you can use to help bump your number up a bit. It may take a bit of sacrifice and some time but those numbers aren't fixed in stone and you can do something to put yourself in a better position to buy your first home.
Join us next time when we discuss what else might be important on your credit report as we continue to explore the question:
Am I Ready to Buy My First Home?