With a credit score of 716, you are in the good credit bracket Based on FICO standards, your score is slightly below the very good credit score bracket that ranges from 740 to 799 Although your credit score is not in the very good bracket, a 716 credit score means that you have a reasonable chance of being approved for a mortgage for a house.
A credit score of 620 or higher is considered to be a good score to buy a house
Conventional loans need a credit score of 620 or above. Stated differently, if your credit score is 620 or higher, you are said to have a minimal credit score that will let you qualify for a mortgage. Although this is often genuine, it is critical to be beyond any doubt that your score by itself will not choose whether or not you may be qualified for a contract or the intrigued rates you may be displayed. Your chances of being enlisted increment with an expanding credit score.
Though most lenders would like a credit score of 680 up to 740 or over for the borrower to be approved for the lowest and best interest rates, a 620 credit score is reasonable. Depending on other variables such as the borrower's credit history, debt, income, and loan amount applied, the accessible mortgage rates and conditions will vary from one lender to another. Higher credit ratings are preferred, nevertheless, and draw the
Therefore, even if a 716 credit score qualifies you as a bearer of a good credit score and you are much beyond the minimum required range, it would position you at the lowest end of the excellent credit score spectrum. Although you qualify for a mortgage, you won't receive one at the lowest interest rates.
Applying for a Mortgage Preapproval with a 716 Credit Score
Getting pre-approved for a mortgage comes first to start the house-purchasing process. This tells sellers that you are financially eligible to buy their house and also lets them know what price range they can pay. Your lender will go over your credit history and score among other things throughout the preapproval procedure. Credit use is your debt relative to your credit limit. Past payment behavior Your eligibility and the kind of credit also depend on credit history length and type.
Although borrowers may pay more interest than those with outstanding credit scores, you might get preapproved with a 716 credit score. These tips will assist one raise the score and raise their chances of being approved at fair interest rates during the mortgage pre-approval. During the mortgage preapproval process, affordability, credit history, credit score, job status, and other variables might all be relevant.
- Low debt-to-income ratio To ensure that total monthly debt payments including the potential new mortgage payment are not more than 36 of the gross monthly income.
- 20% down payment; The larger down payment reduces the financing risk of the lender.
- Stable reserves Several months of mortgage payments in the form of cash in a bank account
- Consistent income volatility for several years working for the same employer or in the same field
What price range of house can I afford? According to housing professionals, you should spend no more than 3 times your gross household income to buy a house But when it comes to borrowing to buy a house certain standards are used by most mortgage companies namely the debt to income ratio Standards state that your purchasing power is minus other monthly obligations you have like credit cards auto loans and college loans In general you can expect to borrow this amount to buy a house.
With a 716 Credit Score
Up to double or triple your income for the year if you have negligible other liabilities such as credit card or car loans More houses will be approved for you if you eliminate debts before applying for a mortgage.
Ideally, try to save 20 percent down payment The moment you are below this; your mortgage rates will be high and you will have to pay for private mortgage insurance.
4 Tips on How to Increase Your Credit Score to Qualify for a Home Loan
Whatever you can do to improve your credit score will open up more choices in mortgage and may lower interest rates and other costs of borrowing in the long run These are some ways to build up your credit before applying for a mortgage
- Pay off credit card debt Credit card balances should be below $3000 even below $1000, say the experts.
- Always ensure that all the bills such as utility bills, and rent, amongst others, are paid on time In case you cannot make the payments physically use the autopay option Payment history is a significant determinant of credit score.
- Avoid making large purchases in which you need new financing New financing can affect your credit for instance car loans
- Do not shut down credit cards that are not in use Your credit utilization rate affects your credit score When you have credit available to you that you are not using,
- It can be as simple as checking reports for mistakes and rectifying them if any: This can help raise your credit score immediately
The Takeaway
A 716 credit score falls into a good credit bracket meaning you stand a fair chance of being approved for a mortgage loan to buy a house However, you are likely to pay more for your mortgage interest rates and fees compared to borrowers with superior credit scores of 750 and above, Nevertheless, there is much you can do like paying off your debts, putting down a lot of money for the house, paying all your bills on time and extend your credit history
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