Credit Score Impact Pt.3

This is the last installment in my quick reference guide to credit scores and their importance in home financing.

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Long-Term Credit Score Effects

Applying for a Mortgage: Multiple hard inquiries within 14–45 days (rate shopping) count as one, dropping your score by 5–10 points temporarily.
After Approval: Timely mortgage payments boost your score over time (payment history is 35% of FICO).
Default Risk: Missed payments tank your score, and foreclosure can drop it by 100–150 points, lingering for 7 years.

Strategies to Mitigate Low Score Impact

Improve Score Pre-Application: Pay down debt, avoid new credit, correct report errors (check via AnnualCreditReport.com).
Co-Signer: Adds their score/income to the application (conventional/VA/FHA).
Alternative Financing: Seller financing, rent-to-own, or hard money loans bypass traditional score hurdles.
Down Payment Assistance: Boosts approval odds for lower scores (check state/local programs).

Bottom Line

760+: Best rates, terms, and flexibility across all options.
620–759: Viable for most loans, but costs rise as scores drop.
Below 620: Limited to FHA, VA (if eligible), or non-traditional methods; expect higher rates and hurdles.

Your credit score doesn’t just determine if you can buy a home—it shapes how much you’ll pay over time.