Do I Need a Higher Credit Score?

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Do you need a higher credit score to buy a house? That depends on what type of loan you want and interest rate you’re aiming for. 

Minimum Credit Score Required for Various Loans

The most common type of mortgage loan is a conventional loan. To get that type of mortgage, it’s usually recommended that you have a score of at least 620. But there are other options available as well. For example, if you have a downpayment of at least 3.5% you may be able to get an FHA loan with a score of just 580. 

Have at least 10% of a down payment? You may be able to get an FHA loan with a score as low as 500. Yes, saving up 10% of a down payment is tough and may take time to save up. But some people have assets available but poor credit. These types of FHA loans are great opportunities for people who are down on their luck but have some assets to use. 

Another option for some people is a VA loan. Reserved for military veterans, a VA loan is great because it doesn’t require a down payment and the homeowner doesn’t need to pay Private Mortgage Insurance (PMI.) Your credit score does typically need to be at least 620, so keep that in mind.

How Do You Raise Your Credit Score?

If you need to raise your credit score to qualify for one of these loans, there are a lot of things you can do. The first place to start is to make sure you pay all your bills on time. From student loans to credit cards and utility bills, they all matter. If you can pay extra and pay down the principle, great. But start by doing at least the minimum and you’re off to a great start. 

Next, try to lower your credit utilization ratio. This is where paying down the principle becomes more important. Your credit utilization ratio is essentially how much of your credit maximum is being used by revolving balances. So, if you have two credit cards and each has a maximum of $10,000, your credit maximum is $20,000. If you have balances of $12,000, that means you’re using up $12,000/$20,000 = 60% of your maximum. 

Try to get your ratio below 50% to improve your credit score. If you can get it below 30%, your score will start going up even faster. 

What Other Factors Go Into Credit Score?

Besides your payment history and credit utilization ratio, there are a few other things that go into your score. One thing is the length of your credit history. It’s generally better to keep an account open for a long period of time. If you completely pay off a credit card, don’t close the account. Keep the account open, that way it keeps the length of your credit history getting longer. 

Another factor is how often your credit gets pulled by potential lenders. If this is happening regularly, that’s a bad sign. It tells the credit bureaus you may not be in a good place financially, hence all the credit inquiries. 

Do you need a higher credit score? That depends on what type of mortgage you want, but you may be in a great position as it is. Give us a call at (562) 924-7884 and we’ll help find a loan that works specifically for you. 


Our products and services have no affiliation with or endorsement from any government agency or body.

On a Conventional 30-year Fixed-rate purchase with loan amount $489,000 (at 95% LTV i.e. 5% down payment from borrower) at an interest rate of 3.375% with 0 % discount point (Annual percentage rate – 3.5918%), you will be required to make 360 equal monthly payment of $1652.67 (which includes principal and interest only, so your actual payment will be higher).