Will Your 2024 Credit Score Get You The Home Loan You Need?
For most people, mortgages go hand-in-hand with buying a home. A National Associations of Realtors report from November 2023 noted that 80% of homebuyers financed their purchases, slightly higher than the 78% recorded last year but notably lower than the 87% reported two years ago. What is the best credit score to buy a house?
To take it one logical step further, credit scores go hand-in-hand with mortgages, so if you’re considering buying a home, you’ll also need to consider your credit score.
We researched top national credit score indicators to answer two important questions for homebuyers: How are credit scores determined, and what minimum credit score is needed to get a home loan in 2024 when so much is up in the air?
How are credit scores determined?
Your credit score is a number that gives lenders a snapshot of how good you are at paying bills on time and not overextending yourself financially. Lenders use this to gauge how likely you are to repay debt.
A credit report and a credit score are different, but a credit score is calculated using information in your credit report. By law, you’re entitled to a free annual credit report from each credit reporting company. Most people obtain credit reports from one of three major sources: Experian, TransUnion, or Equifax.
Those companies will also provide you with a credit score for a fee. Sometimes, your credit card company will share your credit score for free.
Because your credit score can affect credit card approvals, loan application approvals, insurance premium rates, rental prospects, and employment applications, it’s a good idea to keep an eye on your credit report.
Check annually for discrepancies or fraud. Once you’ve obtained your credit report, you can get a basic idea of how a lender will view your credit, even if you don’t have a numerical score.
