In the U.S., credit is a determining factor in virtually every financial transaction—from renting a car to buying a house. It reflects your financial reliability and shows banks and lenders whether you’re a trustworthy borrower.
Most homebuyers in the U.S. rely on financing—known as a mortgage—to purchase a home. And to secure a mortgage with favorable terms, you need a good credit history. The better your credit, the lower your interest rates and the better your loan conditions.
How Is Credit Evaluated in the U.S.?
Credit in the U.S. is measured through a system called the credit score, which is a number based on your financial history. This score ranges from 300 to 850:
- 300 to 579 – Poor credit
- 580 to 669 – Fair credit
- 670 to 739 – Good credit
- 740 to 799 – Very good credit
- 800 to 850 – Excellent credit
The main credit bureaus in the U.S. are:
- Experian
- Equifax
- TransUnion
They analyze your financial behavior and assign a score based on the following factors:
✔ Payment History (35%) – Paying your bills on time is essential for a high score.
✔ Credit Utilization (30%) – Using less than 30% of your credit card limit helps maintain a good score.
✔ Length of Credit History (15%) – The longer you’ve had credit, the better.
✔ New Credit Accounts (10%) – Opening too many accounts in a short time can lower your score.
✔ Credit Mix (10%) – Having a mix of credit types (cards, loans, financing) can be a positive indicator.
What Credit Score Is Required to Buy a Home?
Each financial institution has its own criteria, but in general, the minimum credit scores required for home financing are:
- FHA Loan (government-backed) – Requires a minimum score of 580
- Conventional Loan (Fannie Mae and Freddie Mac) – Typically requires a score of 620 or higher
- Jumbo Loan (for high-value properties) – Requires a score of 700 or more
If your score is low, interest rates may be significantly higher, making the mortgage more expensive in the long term.
How to Build or Improve Your Credit in the U.S.
If you don’t yet have a credit history in the U.S. or need to improve your score, here are some tips:
- Open a U.S. Bank Account
Keeping an active and regularly used bank account helps establish financial credibility. - Apply for a Credit Card
If you have no credit history, start with a secured credit card, where you deposit a certain amount as collateral. Use it regularly and pay it off on time to build your score. - Pay Your Bills on Time
Bills such as utilities, internet, and even rent can be reported to credit bureaus and help build your credit history. - Avoid Maxing Out Your Credit Limit
Using only 30% or less of your available credit keeps your score healthy. - Don’t Apply for Too Much Credit at Once
Avoid opening multiple accounts in a short time—it can temporarily lower your score.
The Role of the Down Payment in Buying a Home
Besides credit, another key factor for getting mortgage approval is the down payment—the amount you pay upfront when purchasing a property. Minimum amounts vary by loan type:
- FHA Loan – Requires only 3.5% of the home’s value
- Conventional Loan – May require 5% to 20% down
- Jumbo Loan – Usually requires 20% or more
Having good credit can help you qualify for a lower down payment and better interest rates.
Can You Buy a Property Without Credit in the U.S.?
If you haven’t built a credit history in the U.S. yet, there are a few alternatives:
✔ Foreign National Loan – Some lenders offer financing for non-residents, but it typically requires a larger down payment (30% or more) and higher interest rates.
✔ Cash Purchase – If you can afford to pay in full, you won’t need credit—but this may not be feasible for everyone.
✔ Co-signers – If you have a family member or friend with good U.S. credit, they may co-sign your mortgage.
We Help You to Buy Your Property
If you want to buy a house in the U.S., the first step is taking care of your credit. A good score ensures better loan terms, lower interest rates, and access to more affordable properties.
If you need help finding the ideal property or understanding the financing process, MGN Fine Homes is here to assist you!