Realizing the American dream of owning a house always takes years of effort and savings, and the recent increases in real estate prices have furthered the misery of wishful buyers. In the last year, prices of real estate in Dallas have increased by up to 10.3 percent, whereas nationally, the inflation clocked 6.8. The skyrocketing prices, however, are not the only factor restraining people from buying a house, as having a poor credit score is no less a deterrent.
If a low credit score is restricting you from buying a house and you need credit repair, it is important to understand that there is no short route to success. Though many Dallas credit repair agencies promise a quick fix to credit score woes – more often than not, the words are nothing more than inflated marketing claims. To help you decide whether you need credit repair, let’s dive deeper into the subject.
Significance of Credit Score in Home Loan Approval
Why do we have so much fuss about credit score and how it relates to your eligibility for a home loan? In simple words,, your credit score is a reflection of your credit history, which lenders evaluate when processing your loan request – be it for a house, car or any other asset. If you have a poor credit score – even if your loan request is approved, the interest is always on the higher side.
Minimum Home Loan Qualifications
In order to qualify for a home loan, your credit score must be in the range of 620. Having said that, a score of 720 or above might be a prerequisite in some cases. According to the US Department of Housing and Urban Development (HUD), in order to qualify for the 3.5 percent down payment program – the most sought-after loan option in the US – the applicant needs to have a FICO score of 580 or above. Whereas, few heuristics such as Bankrate Publication still say that your credit score must be in the range of 740 in order to obtain a loan at a low affordable interest rate.
Averaging the figures from these sources, it would be safe to say that the minimum qualification in terms of credit score, for a person applying for a home loan is 600-700. If your credit score is lower than this, you may have a tough time getting a home loan, and even if you are successful – as stated earlier – you will be asked to pay a high interest rate.
The Solution: Repair Bad Credit Score
Having a low credit score is a clear reflection of poor financial management and thus raises a serious question on the credibility of the applicant. If, for instance, someone has a credit score of less than 500 or 580, it will be almost impossible for them to obtain a loan. As a remedial measure, those with a poor credit score need to focus on improving their credit profile. Though resurrection takes time and disciplined financial management, with the help of an able financial consultant, there is always hope.
Low Credit Scores and Home Loan Approvals
Buying a house is usually a distant dream for an average citizen, and adding to the challenges, many of us have a low credit score that prevents us from obtaining a loan at favorable terms or at all. If such is the case, do not waste any time in starting the credit repair process. When you are at it, remember that any quick fix solution for credit repair may do more harm than good. If you have a low credit score, always consult an expert. If you wish to learn more about the role of credit score in obtaining home loans or have any other question, feel free to speak with one of our credit repair specialists.