What’s a Good Credit Score?

What is a credit score?

A credit score is a 3-digit number calculated through your credit report, including your payment history, accrued debt, and other financial factors. This score is often utilized to determine how much money a lender or bank would lend out to you, based on your previous proven abilities to handle debt responsibly.

What credit score do you need for what type of loan?

There are different credit score requirements for each type of loan. Here's a breakdown of the different scores needed for each loan:

1. Conventional Loan Requirements: suited for borrowers with a higher credit score and money for a down payment already in the bank. The recommended credit score to get accepted for this type of loan is 620 or higher.
2. FHA Loan Requirements: suited for borrowers who might not have money for a down payment yet and have a lower credit score. The recommended credit score to get accepted for this type of loan is 580 or higher.
3. VA Loan Requirements: suitable for veterans or qualified servicemembers and spouses. Technically, there is no industry-set minimum credit score for this type of loan, but some lenders still require a score of at least 550 or higher.
4. USDA Loan Requirements: suited for borrowers in rural or suburban areas. The recommended credit score to get accepted for this type of loan is 640 or higher.

What factors influence your credit score?

There are multiple factors that change how your credit score is calculated. Some of the factors considered include:

• How you utilize your credit 
• How long you have had a credit account
• How many credit accounts you have
• What types of credit you use
• Whether your payments are made on time or not

Tips on how to increase your credit score before buying

There are different ways to increase your credit score but the best tip would be to pay off as much of your outstanding debt as possible before deciding to apply for a loan or purchase a house. If you cannot pay off your debts immediately, make sure to pay all bills on time. Finally, don't take out any more credit while you have outstanding debts.

Services at Modern Lending

If you are interested in purchasing a home and getting a loan, reach out to the professionals at Modern Lending to help guide you through the home-buying process. Our loan officers have the experience needed to help you acquire the best loan for your situation.