Are you getting ready to look at a home or pursue pre-qualification or pre-approval for a mortgage? If you’re almost ready to rock, but you’re still a few points away from hitting a credit score milestone, your chances of getting the home you want could be affected.
If you’re at the stage of looking at daily mortgage interest rates and considering open houses, it’s almost time to buy – and you can fine tune your score to hit those milestones.
The average daily mortgage interest rate for Thursday, January 18, 2024 is 6.89% for a 30 year fixed rate. The rate rose 0.01% from yesterday and 0.24% from December 2023. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
The average daily mortgage interest rate for Thursday, January 18, 2024 is 6.17% for a 15 year fixed rate. The rate rose 0.02% from yesterday and 0.02% from December 2023. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
What are credit score milestones related to homeownership?
Credit score milestones are indicators of a certain level of financial access that your prospective lender will look for. Common credit score milestones include:
- 500: The minimum credit score to qualify for an FHA loan with a 10% down payment.
- 580: The minimum credit score to qualify for an FHA loan with a 3.5% down payment.
- 620: Ideal minimum for an FHA or VA loan.
- 700: Standard “large purchase” credit score, particularly for those buying homes solo.
- 740: A “very good” credit score, which will get you a lower interest rate from most lenders.
Sometimes, you’ll find yourself just short of those milestones. This means you need to think fast to hit the mark, especially when it can make such a difference in the type of loan you can get, or the interest rate you can access.
These two small adjustments bump your credit score
If you’re a renter, consider having your rent reported. When homeowners make mortgage payments, those payments are reported as positive, and impact a person’s credit score. This gives an existing homeowner a major advantage as a buyer in the market. But, if you’re paying your rent on time, you can still make an impact. You can use a resource like RentReporters to have your rent reported to the credit bureaus. This can increase your score 5-10 points.
If you’re just shy of a milestone and you’re a credit card user, consider asking for an increase on your card. This is especially important if you’ve gotten a raise or increased your income since applying for your card, but many people can receive a credit line increase after simply having the card and keeping the balance low for a while. A credit line increase will show more credit available on your credit report – and it will lower your utilization if you’re carrying a balance.
Lastly, don’t forget to check your official reports from Experian and TransUnion frequently – those are the ones the lenders will use, NOT your CreditKarma score, which updates daily.