Can you buy a Home with Credit Scores below 720 in Escondido

Can you buy a Home with Credit Scores below 720 in Escondido

Yes, you can buy a home with a credit score below 720 in Escondido & CA. Did you know that the interest rate you get is partly determined by credit scores. You can buy a home with scores above 620 and still get a reasonable interest rate. The general rule is scores above 720 get the lowest interest rate.

So what can YOU do to bring your score well above 720?

How Your Credit is Scored

Basically, there are 3 types of credit: home/mortgage, installment (car loans), and revolving (credit cards).

The 3 credit bureaus issue a credit score which is compiled into a Tri-Merge Report. A creditor may report to one, or all three bureaus. When you buy a home, the lender will qualify you based on your middle credit score. Your credit score is determined by the following:

• Payment history.............. 35% of score
  
• Amount owing................. 30% of score
• Length of time................ 15% of score
  
• New credit....................... 10% of score
• How credit is used............ 10% of score

1. Payment History -- check for erroneous late payment dates, check collections accounts to make sure the "date last reported" is the late date not the date it was reported to collections, and check to make sure all accounts are yours. Correct any errors to improve your credit score.

2. Amount Owing -- keep balances below 50% of the credit card limit and dont carry more than 5 revolving accounts to maintain or improve your credit score. Debt consolidation can hurt your credit score.

3. Length of Time -- credit established for more than 12 months can help your credit score.

4. New Credit -- several inquiries into your credit over a period of 1-3 months can harm your credit score (note: several home mortgage inquiries within 14 days will only show as 1 inquiry).

5. Type of Credit -- keep a mixture of home/mortgage, revolving, installment to maintain your credit score, and keep a minimum of 4 accounts open.

Improve Your Credit Score

1. Keep balances below 50% of the credit limit.
2. Dont open more than 5 revolving type accounts.
3. Dont pay off old judgements/liens, if you do then it reports the current date so wait until it's older than 24 months.
4. Bring all past due accounts current.
5. Do not be late on payments, especially home mortgages which damage your credit more than lates on other credit.
6. Use your credit regularly, a mix of 4-5 accounts.

In order of importance, from good credit to bad: satisfactory, late payment on installment or revolving, collection or judgement, home mortgage late or bankruptcy, short sale, and lastly foreclosure.