What Are My Credit Scores?

September 21, 2015
Credit Scores

The first thing you must do when buying your first home is check your credit history and obtain your 3 credit scores online. You should review your credit history and scores with a mortgage professional to determine if your credit qualifies you for the program. The minimum credit score requirement for the first time home buyer program is 620. I would like to point out that some people complain about paying for a credit report with 3 scores but you are making the biggest purchase of your life and you need to make a small investment to find out where you stand with your credit.

Most lenders take the middle of 3 scores you get from Experian, TransUnion, and Equifax not the average score. For example, if your scores are 632, 645, and 710 then the score which is used to qualify for the program is 645 not 662 which is the average of the 3 scores. Also, you will need to review your credit history for any derogatory accounts and discrepancies. If there are collections or judgements on your credit report then they may have to be paid off but you need to talk to a professional because paying off bad debt may lower your credit scores. For example, if you have been making payments on an IRS tax judgement for the last year and you go to pay it off then the credit bureaus will pick up this activity as a recent derogatory event and you may be penalized heavily on your credit scores even though this may intuitively be the right thing to do. In this situation, a professional may advise you to pay the judgement off just prior to closing on your new home so it doesn't have an impact on your scores right away.

Today, lenders are looking at credit reports very closely and you need to make sure everything looks right ahead of time to increase your chances of getting approved for the best first time home buyer loan program at the best interest rate. I have seen too many first time home buyers find a home and then scramble to get financing just see their chances of owning a home get crushed because they didn't take the time to find out what their credit looks like.