If you're applying for a mortgage in Florida, then you are probably wondering about your credit score. Chances are that sometime during the mortgage application process you have already been asked what your credit score is.
Why Do Credit Scores Matter in the Florida Mortgage Application?
When applying for a mortgage in Florida, your credit score is important to your lender because that score is considered a statistical representation of your likelihood to repay debt.
But bottom line, perhaps you're wondering "How LOW of a score can I have, and still get approved for a loan?"
Let's take the FHA home mortgage loan, for example. FHA loans themselves do not technically require a minimum score to be approved for their loans, BUT every lender has their own set of rules that they're going to employ in addition to the minimums required by the type of loan you're applying for (FHA mortgage or USDA mortgage, for example). These are called "overlays". Usually these minimum requirements include credit scores, and for most lenders their overlay for an FHA mortgage requires a 640 credit score or better. Some will consider down to a 620 score for a loan approval, but they may require other aspects of your Florida mortgage application to be stronger (such as: having extra money in the bank, or putting more money down). These guidelines do occasionally change, but the recent trend has been toward tougher guidelines. That is why whether you're considering buying a home in Tampa, FL or refinancing a mortgage in Naples, FL, and if you can currently get approved right now, don't put it off any longer because it isn't becoming any easier to do so. It is always best to speak with a mortgage professional who stays abreast of current changes in Florida mortgage underwriting to determine if you can currently qualify for a loan to buy the home you want.
I'm Thinking of Applying for a Mortgage, How Do I Found Out My Credit Scores?
2 Ways to get your credit report WITH scores:
1. Pull Your Own Credit Report
Sites like www.annualcreditreport.com and www.freecreditreport.com are ways to get your credit report. Each of the bureaus has to provide a free copy of your report to you, at your request, at least once a year. Here's the catch: what they do not have to provide are your credit scores. Many of these sites and services will provide you a report with scores as long as you subscribe to their services. Usually this is something like credit monitoring or fraud monitoring of your credit profile. There is nothing wrong with these services and I would not even say they are ill-advised. Trust me, you don't want to find out about fraud or ID theft at the time you go to make your mortgage application, you want to take care of that problem well in advance. But perhaps you are only seeking your credit information and do not want to subscribe to the service. It is common for these services to offer a free introductory period and no contractual obligations. That puts you at liberty to cancel the service once they have provided the credit scores and credit report.
2. Have a Florida Mortgage Professional Pull a Credit Report for You
Just like the first option, there are both benefits and drawbacks to this. First, the drawback is that it will count as an "inquiry" on your credit, which might cause you to temporarily drop a few points. However if it's the time for filling out the mortgage application, then this is absolutely necessary and also part of the process. It will typically cost in the range of $10 to $15. One benefit of this route is that you are seeing the results of an actual mortgage credit report. A report pulled for this purpose may produce different results than a credit report pulled by the borrower themself, and would also likely be different than a credit report pulled by another non-mortgage party (such as a car dealership).
This report will tell you the scores that will really matter to your home loan application.
Additionally, you will benefit from having your Florida mortgage professional review this report and educate you on the signficance of the content in your credit report.
I Have 3 Credit Scores, In a Mortgage Application, Which One Matters?
The answer is simple: the middle credit score.
This means: not the highest credit score, not the lowest credit score, and not the average of the 3 credit scores. It also bears noting that there are different types of credit reports. If someone pulls their own credit report online, or they have a credit report pulled when applying for a car loan, it is likely to produce a different result and different scores from a credit report pulled for a mortgage application. Know that a Florida mortgage broker may see different scores than the car salesman you just spoke to or than the credit scores you received from a credit monitoring service.
Remember that a credit report is just a snapshot in time. It reflects what is CURRENTLY being reported about the applicant, and that is derived from all the things that have been reported in the past.
In the same way that people are a product of their combined experiences, so the credit report is a product of all of the applicant's combined credit history.
I address more Florida mortgage questions at my website: BestMortgageLoanRateInFlorida.com
For further information please call Taylor Ard at 800-330-7704 or email Taylor@USmtgLender.com