There are many misconceptions about what credit score you need to have to be able to buy a home. Recently, it was reported that 24% of people who rent think their credit score is too low. Here’s a breakdown of the respondents’ FICO scores:
- 16% of people had a poor credit score between 300 and 579
- 18% had a fair score between 580 and 669
- 21% had good scores between 670 and 739
- 25% had very good scores between 740 and 799
- 20% had exceptional scores of 800 or higher
Thank heavens we’re not waiting for all the exceptional people to buy houses, or we might be in trouble! But as it turns out, there are actually a lot of programs available for people with scores as low as 580 to buy houses.
The Federal Housing Authority (FHA) has such programs that would allow a lower-scoring person to buy a home, and the Department of Veterans Affairs (VA) doesn’t have a limit on what your credit score must be to qualify. The USDA’s standards for credit scores are variable, as well. As you can see, there are plenty of options, and none of them require a 700 FICO score.
Last year, the average FICO score for homebuyers was 726, but with the availability of these programs, that number is dropping.
As you can see in the chart above, the average FICO score did change in 2008 when the market shifted and credit scores rose, but now they’re getting more in line. Right now, 84% of Americans have a credit score that will allow them to buy a house.
If you have any questions about your credit score and whether you’d be eligible to buy a home, or if you’d like advice about how to raise a low credit score, reach out to us. We’d love to help you position yourself to make your dream of homeownership come true.
If you have any questions for me about your personal credit situation or about anything else related to real estate, feel free to give me a call or send me an email today. I look forward to hearing from you soon.