By Kelsey Burkett, December 10, 2024
As mortgage interest rates continue to fluctuate, many potential buyers are considering whether now—or the near future—is the right time to buy a home. If you’re thinking about making a move, laying the groundwork early is essential. One critical aspect of this preparation is building and maintaining a strong credit score, which plays a pivotal role in your ability to secure a mortgage.
The Importance of Creditworthiness
Credit scores are a key factor in determining not only whether you’re approved for a mortgage but also the interest rate you’re offered. A higher score can translate into significant savings over the life of your loan. According to the Consumer Financial Protection Bureau, “A higher credit score can lead to better mortgage rates, ultimately saving you thousands in interest over the life of a loan.” This underscores the direct impact creditworthiness has on affordability in today’s housing market.
What’s a Good Credit Score for a Mortgage?
Contrary to popular belief that you need a perfect score, most lenders consider a score in the “Good” range (670–739) to be a solid starting point. For the best rates, aim for the “Very Good” range (740–799). The Federal Reserve Bank of New York reports that the median credit score among mortgage applicants in the U.S. is around 770. High, but not perfect, scores are common.
Steps to Strengthen Your Credit Score
If your score could use some improvement, financial experts offer actionable steps:
- Pay on Time: Payment history is the most significant factor influencing your score. Always prioritize on-time payments to prevent penalties.
- Reduce Credit Utilization: Aim to keep your credit card balances below 30% of their limits. Lower utilization rates indicate better financial management.
- Limit New Credit Applications: Too many hard inquiries can temporarily lower your score, so only apply for credit when necessary (source)
Consulting a Lender
Mortgage brokers and lenders often use tools like FICO scores but apply unique criteria to assess risk. As FICO clarifies:
“Each lender has its own strategy, including acceptable risk levels and scoring criteria, which means there’s no universal cutoff score.”
As you start planning for homeownership, a good foundational step is to understand your credit score and how you can improve it. Speaking with a knowledgeable mortgage broker who is willing to help you understand all of the factors, including your credit score, and how they influence your options, rates and monthly payment is pivotal. If you’re looking for help or advice; don’t hesitate to reach out to me: kelsey@livingroomre.com | @kcb_portland.
Kelsey Burkett
Broker | OR
She/Her
I bring a unique blend of skills and experience to real estate, with fifteen years spent focused on delivering exceptional client service and outcomes in the creative marketing industry. What sets me apart is my relentless attention to detail, reliability, dedication to service and ability to be quick to action. I will help you see the bigger picture while expertly navigating the intricacies of real estate transactions. I pride myself on being able to guide my clients through the home buying and selling experience with the information and knowledge they need to feel confident and informed, all the while forming a genuine connection that lasts far beyond the transaction.
I enjoy working with clients with a wide variety of goals. I have a particular affinity for first-time homebuyers, as well as those who deviate from conventional paths. I believe that creating a home environment that reflects one's identity and values is a powerful form of self-expression.
I've channeled my energy into building community and helping others find theirs. I'd love to help you find where you belong by guiding you through the buying/selling process and towards achieving your home ownership goals.
When I'm not focusing on real estate, I enjoy taking care of plants and animals, hot yoga, cooking and wine.
I work as a team, alongside Tracey Henkels, Principal Broker Licensed in OR.
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- T: 971-371-0203
- kelsey@livingroomre.com
