Being a homebuyer in 2023 is going to be tough. Especially if you’ve been renting and your credit score isn’t too good. With home prices still high in many places and inventory at record lows, cash buyers are typically still winning bidding wars. I’ll make no bones about it; if you need to purchase a home this year, it will be tough for many reasons. Let’s start with interest rates. They are still so much higher than we saw last year, and I seriously doubt we’ll see them that low again in our lifetime. This, of course, makes getting approved for a mortgage challenging. But don’t worry; we’re here to help. In this article, we’ll look at the average credit score you need to buy a house in 2023 and some tips for improving your credit score to increase your chances of getting approved for a mortgage with favorable terms.
As of early 2023, the average credit score for homebuyers in the United States is around 680. Remember that the minimum credit score required to qualify for a mortgage can vary depending on the lender and the type of loan you’re seeking. Some lenders may require a score of 700 or higher for certain types of loans, while others might be more flexible. But to win in a bidding war, you’ll need to have a strong downpayment, even though many say that’s not so. If you are to beat out a cash buyer, you’ll need to have the strongest argument on paper, starting with your credit score.
If you want to improve your credit score, here are some tips:
- Pay your bills on time: Late payments can significantly lower your credit score, so make sure to pay all of your bills on time, every time.
- Keep your credit utilization low: Your credit utilization ratio is the amount of credit you’re using compared to the amount of credit available to you. Try to keep your credit utilization ratio below 30% to help improve your credit score.
- Check your credit reports regularly: Mistakes on your credit report can harm your credit score. Check your credit reports at least once a year and dispute any errors you find.
- Don’t open too many new accounts: Opening multiple new credit accounts quickly can hurt your credit score. If you need to open new accounts, space them out over time.
- Keep old credit accounts open: The length of your credit history is essential to your credit score. Keep old credit accounts open, even if you don’t use them often, to help improve your credit score.
Here’s some good news: it’s possible to improve your credit score by paying your rent! A new law requires credit bureaus to include your rental payment history in your credit report. Your on-time rent payments can help improve your credit score, but only if your landlord reports your payments to the credit bureaus. We have a couple of client recommendations for companies to help with this. Check out our Client Approved Services page for more information on those.
Improving your credit score takes time, but it’s worth the effort. By following the tips above and making on-time rental payments, you can increase your chances of getting approved for a mortgage with favorable terms and save money on interest over the life of your loan.
In conclusion, the average credit score you need to buy a house is around 680, but remember that the minimum credit score required can vary by lender and loan type. To improve your credit score, pay your bills on time, keep your credit utilization low, check your credit reports regularly, don’t open too many new accounts, and keep old credit accounts open. And don’t forget that you can now improve your credit score by making on-time rental payments!
If you’re ready to take the next step in your home buying journey, we invite you to visit our website at https://searchhomesinny.com for mortgage assistance and to find the perfect home. Our community of experienced real estate professionals can help you navigate the current market and find a home that meets your needs and budget.
And be sure to check out our next article about closing costs in New York when buying a house. We’ll take a closer look at what closing costs are, how much you can expect to pay, and some tips for minimizing your costs. Stay tuned!