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What Credit Score Do You Need To Buy A Home



A credit score or rating may seem like a confusing topic to some people, particularly if you don’t have financial savvy. Nonetheless, it is common knowledge that a good credit score can significantly increase your chances of qualifying for credit, such as mortgages and credit card services.

However, before you can get this credit, you’ll have to satisfy the minimum requirements. These necessities include having a good credit score. Nowadays, most mortgage lenders use a standard credit scoring system known as the FICO® score.

Although this scoring system plays a critical role during the mortgage application process, financial institutions use several determinant factors that assess whether you deserve the loan. Such factors include the level of income, assets, debts, and the property’s valuation, all of which will determine if you can get the mortgage approved.

We will look at the various credit scores you’ll need before applying for a mortgage loan and how lenders review your credit rating. We will also dig into whether you can procure a mortgage with bad credit and how you can turn your bad credit score into a good one.

How Lenders Review Your Credit Rating?

Credit scores are a numerical system that provides insight into your credit profile. Different financial institutions use varying crediting rating systems to determine the creditworthiness of a borrower. The two most common credit-scoring systems are the FICO® score and the Vantage Score. Most home lending institutions will use the FICO model.

Excellent credit history and scores help to portray that you as an individual deserve credit and can repay the mortgage. When you have a poor credit rating, lenders may set more stringent mortgage requirements for you or deny you credit altogether.

Minimum Credit Score You Will Need For a Mortgage Loan

Credit rating requirements differ with time, and currently, this condition varies depending on the mortgage type you are looking to get. Here is a detailed overview of these various mortgage types and their required minimum FICO® Scores.

Understanding the credit score requirements will help when you are going to get your mortgage approved.


Conventional mortgages are credit loans you can use when buying homes, and they follow the Fannie Mae and Freddie Mac standards. These governmental agencies insure such mortgages. If you are looking to secure such a loan, you’ll need a FICO® Score of approximately 740 or higher to get the best rates. When you meet this requirement, you’ll be in a position for a conventional mortgage loan with the best terms.

Potential homeowners who want to access conventional loans need to have better than average credit. Some lending institutions will grant a loan with a score as low as 620, but you won’t get the most favorable rates and terms.


FHA loans refer to mortgages insured under the Federal Housing Administration, meaning they are less volatile and risky. It is often easier to get an FHA loan than a conventional loan. This mortgage option allows the loan applicant to pay a low down payment of 3.5%.

You’ll also receive access to equity refinances, and you can refinance approximately 97.75% of the residence’s property value.

FHA mortgages allow potential homebuyers with lower credit scores to secure a home. One significant advantage of the FHA loan is that you readjust your monthly repayment rates after discussing your financial situation with your bank or other financial institution.

FHA mortgages need you to have a minimum credit rating of 580 and above before you can apply for the loan. The down payment charge is a measly 3.5%, and you don’t need an official FICO® score to get the loan.


VA loans refer to mortgages insured and offered by the U.S. Department of Veteran Affairs. These mortgages are popular because they don’t require any down payments, and potential borrowers with low credit ratings can easily access them.

Before you know the credit score needed to buy a house using VA loans, it would be best to know about the eligibility requirements. These requirements include spouse relation to deceased military personnel during active duty or being a veteran in the U.S. Military.

What Credit Score Do You Need When Buying a Home?

Most financial institutions and lenders set a baseline credit rating that serves as a qualifying standard when applicants apply for a mortgage. As long as you have a credit rating of above 700, you can effortlessly acquire a low-interest mortgage that you can pay back slowly.

However, if your current credit scores are in the 600s range, some financial institutions can consider you a financial risk and limit your mortgage options. For instance, if your credit rating is at 680, credit lenders might still consider you creditworthy, and you can get a mortgage.

Most lenders prefer to use a credit rating of 620-640 as the minimum credit score for procuring a quality mortgage. One of the best ways to quickly bump up your credit scores is to use a financial service such as Credit Karma.

Credit Karma gives you the knowledge to make the right credit decisions – the ones that will help improve your credit score.

Can You Purchase a Home With Bad Credit?

From a financial standpoint, you can procure a home even if you have bad credit. If your credit rating is within the 500s range, you can still qualify for a subprime mortgage loan. Such loans come with additional fees and higher interest rates.

Additionally, subprime loans require you to pay a 20% down payment if you don’t have the credit score needed to buy a house. If you lack the down payment for the mortgage, you’ll have to take up private mortgage insurance that often has pricy premiums.

Credit scores can fluctuate depending on your current financial situation. You can improve a bad credit rating by working on your creditworthiness, and your score will slowly increase. Start by looking at your bad financial habits and see where you can cut back.

Also, look at how you can reduce your debt load and clarify any credit report errors that may be lowering your creditworthiness. Nowadays, you can get a free credit score rating and tips on improving your financial situation to ensure you have a good credit score. Credit Karma, as mentioned, can really help with that.

If you have a terrible credit rating, it would be best to improve your credit so that you can become eligible for low-interest rate mortgages.

Final Thoughts

When procuring a mortgage loan, it would be best to gather all relevant financial documents and consider finding a loan co-signer. It would also help if you clearly understood where your credit score stands at the moment and identify efficient techniques to increase it. Hopefully, you have found the tips on the credit score needed to buy a home to be useful.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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