What Credit Score is Needed to Buy a House in Alabama

Buying a home in Alabama is not something you can do overnight. There is a lot of work entailed in the home buying process. You not only have to find the perfect home for you and your family, but you also have to find the right mortgage loan.

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There are differing factors that a lender looks at to decide what kind of rates you’re eligible for, and if they should provide you a loan. As an example, a lender will look at your debt, savings, income, as well as your credit score before they can decide to approve or deny your loan application. Before you even start the house hunting process, it may be a good idea to take a look at where you standing, and see if there is anything you can do to improve your score.

So, how are credit scores determined in Alabama? Your credit score, also referred to as a FICO score, is determined by five things,

  1. Your credit payment history
  2. Your amount owed
  3. The length of your credit history
  4. New credit
  5. Type of credit used

The most influential item is your credit payment history which carries 35% weight followed by the amount owed at 30% and then the order proceeds as stated above, with each of the remaining items boasting a weight of 15%, 10%, and 10% respectively.

So, in Alabama, what credit score is needed to buy a house? As mentioned already, the exact score varies from one type of loan to another. Generally, the loan with the lowest credit score requirement is a portfolio mortgage loan. Most of them require a lower FICO score of 600. FHA and VA usually require at least a 620 credit score while USDA, jumbo and conventional loans (Fannie Mae and Freddie Mac loans) are the highest with a FICO requirement of at least 660.

The good news is that you can improve your score in a very short period. Here is how:

  • Keep your credit card balances as low as possible
  • Only take credit that you can repay
  • Pay your bills on time
  • Stay away from high-interest credit
  • Check your credit reports frequently

For more on how to handle your credit and increase your credit score talk to us today. Don’t let your FICO score be the reason why you can’t own your dream home in Alabama.

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