Does Your Credit Score Give You the Best Mortgage Options?

Credit scores can feel surprisingly personal. You see a number attached to your name, and it’s easy to read more into it than you should. When you’re buying a home, your credit matters because it can affect the mortgage options and terms available to you — but it isn’t a measure of you, and it isn’t the only thing a lender considers. I want you to understand what your credit is telling the lender, what it may mean for your choices, and whether there’s anything worth improving before you buy.

Your credit scores come from information contained in your credit reports. Different scoring models may weigh that information differently, but factors can include:

  • Whether you’ve made your payments on time
  • How much of your available revolving credit you’re using
  • How long you’ve had established credit
  • The different types of accounts in your history
  • Recent applications or inquiries for credit
  • Collections, charge-offs, or other negative information

EVERY CREDIT HISTORY STARTS SOMEWHERE
If you haven’t used much credit before, having a limited history doesn’t mean you’ve done something wrong. It simply means lenders have less information about how you’ve handled borrowed money.

A secured credit card can be one way some people begin establishing a history. Being an authorized user on a responsibly managed account may also affect your credit when that account is reported, although the results vary.

What matters most is developing healthy habits over time. Pay obligations when they’re due, be thoughtful about the debt you take on, and don’t feel that you need to open accounts simply to prove something to a credit-scoring system.

YOU MAY HAVE MORE THAN ONE SCORE
The score you see through your bank or credit card account may not be the exact score a mortgage lender uses. Different credit bureaus and scoring models can produce different numbers, and mortgage programs have rules for determining which scores apply when one or more people are borrowing.

So if the lender shows you a number you weren’t expecting, don’t panic. Ask what it means. The number becomes much less intimidating once someone explains what it’s actually being used for.

YOUR SCORE IS PART OF YOUR STORY — NOT THE WHOLE STORY
Different mortgage programs have different credit requirements, and lenders may have standards of their own. VA, for example, doesn’t establish a minimum credit score for its home loan guaranty, although individual lenders may.

A stronger credit profile may create more favorable options, but a lower score doesn’t automatically tell you what you can or can’t do. Income, debts, savings, down payment, and other factors matter too.

Before you decide you’re “not ready” to buy a home because of a number, let someone who understands mortgage lending look at the whole picture.

IF YOUR CREDIT NEEDS A LITTLE ATTENTION
Start by knowing what’s actually on your reports. You can review them through AnnualCreditReport.com and dispute information that isn’t accurate. Keep paying your obligations on time and be mindful of credit card balances.

And if you’re getting close to buying, please talk with a lender before making major credit changes. Don’t open a new card, close an old one, finance a car, move large balances around, or make another significant financial move simply because someone said it would improve your score. Let the lender tell you what would actually help your situation.

You can find additional suggestions for improving your credit score from NerdWallet, but remember that your mortgage is about much more than credit. Your income, debts, savings, down payment, loan program, and the home itself all become part of the conversation.

If you’d like, I can introduce you to mortgage professionals I trust to explain your options without making the process feel overwhelming. Whatever number appears on that credit report, we’ll start with where you are today and figure out where you can go from there. A credit score can help determine the mortgage choices available to you. It doesn’t get to determine how you feel about yourself along the way.