A Guide on the Link between Bank Statement Home Loans and Credit Scores


When you are about to purchase a house, you will face multiple questions. But the most important one remains whether you have adequate credit scores. The Feds indicate that 90% of citizens who applied for mortgages had at least 650 scores. Only 75% of the homebuyers had 700 credit scores. The average FICO score for home loans picked out is at 759; however, 10% of the borrowers still have credit scores below 647. Interestingly, you could be the one among 10% of borrowers! Even though you are a freelancer, lenders will check your credit scores.

What is the minimum credit score you need to carry for the bank statement home loans in Houston? The self-employed people seeking mortgages also wonder how a good credit score is connected to the loan application. Your FICO credit score must be between 300 and 850, and the nation-wide average score is 704. The borrowers over 750 have excellent credit scores, and such brilliant scores can get them full financing as well. Nevertheless, private lenders understand the rocky financial condition of self-employed borrowers when they cannot find new projects. You also need to understand how to deal with credit before applying for a home loan in Houston. Let’s have a look at the necessary tips below.

Credit Score Requirement for Bank Statement Mortgages

The bank statement home loans exclusively cater to freelancers, seasonal workers, and retired professionals. Since they follow an unconventional path of income, the lenders provide relaxed guidelines. However, credit scores still pay a significant role in the loan application. It is wise to find a lender who is willing to provide the bank statement home loan to those with 550 credit scores. Of course, the bad credit puts you at risk and brings higher interest rates into play. If you have credit scores above 700, there is a great chance to get the maximum financing.

Find Ways to Better Your FICO Scores

When you are willing to purchase a home, multiple options are there to improve the credit score. Work on the chances to get great interest rates. At first, pay full bills on time, because payment history accumulates 35% of the credit score. This is one of the yardsticks used to check your creditworthiness. Once you have set reminders or set the dues on auto-pay, you will start making routine payments. Then check the credit utilization rate that again takes 30% of the credit scores. Credit utilization indicates a share of the total credit which you need to utilize at a time. You can start paying down the dues and make sure the outstanding balance remains as low as possible. Do not close the old credit accounts and do not over apply for the new credit. The length of the credit history accounts for up to 15% of the FICO scores. Know where you stand, always.

Remember, you cannot pull up your credit overnight. Reducing credit usage and paying bills can be time-consuming. As a freelancer, it is better to work on your credit months before applying for the bank statement home loan in Houston.

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