Did you think FHA loans are the only option you have against your credit score of 580? Then you couldn’t be more wrong! FICO scores are pretty important when it comes to purchasing a house. This is a way to show that you have the ability to clear the debt. Even this is just a number ranging between 300 and 850; it is used for showing creditworthiness. Various factors play a role in influencing your credit score. Of course, a credit score is not the last thing lenders check in order to find your capability to pay off debt.
However, a credit score of 580 allows you to be eligible for different loan programs. VA loans and FHA loans are two popular options you must keep in mind. Lenders usually prefer borrowers with higher credit scores because they bear almost no risks. If your credit score is above 700, the lender will accept your loan application right away. It does not mean buying a house with 580 credit score in Houston is not impossible, but you can have it an easy way.
Higher credit scores help you find better rates and save more. So, here are a few simple tips to increase your credit score before buying a house in Houston.
Clear Long-standing Debt
Suffering from long-term debt? Whether you have auto loans or student loans, you should pay them off even before sitting down with a mortgage lender. It is highly recommended because there is one less thing to worry about then. By eliminating debt from your profile, you strengthen your application. Also, there is one thing less on your plate. When you clear out debt, you will have zero problems with making monthly payments. So, paying down student or auto loans turns you into a responsible borrower.
Keep an Eye on Credit Reports
You can access free credit every year from Transunion, Equifax, and Experian. After the COVID-19 outbreak, it has become possible to see the report per week. So, you can have ample time to get the report and go through it carefully. Now, tracking the credit reports regularly is a good habit and saves a lot of time. Credit bureaus make many mistakes and this may cost you a heavy mortgage. Staying up-to-date helps you catch up with changes. You can get the errors fixed online, too.
In the end, buying a house with a 580 credit score in Houston is not a complex process. But it’s always better to improve scores before applying for a home loan.