If you’ve ever gone through applying for a home remortgage loan, you already know that it can be complex and time-consuming. Many factors go into getting approved for a remortgage, but your credit score is one of the most important.
Your credit score will determine whether you can get a loan and the total interest charges on that loan. So, what credit score do you need to get approval for a home-to-refinance loan? Let’s look at what Fico score you need to make it happen for you.
Why does your credit score matter?
When you apply for a home loan, lenders want to know that you’ll make all your loan payments on time and in full. So they take a look at your credit score and history to see how likely that is. They also use your credit score and history to determine the interest rate you qualify for.
A higher credit score means that lenders are more likely to approve you for a loan—and give you better rates. You can save thousands of dollars over the life of the loan just by having a high credit score!
What Credit Are Scores Needed For a Home Remortgage?
When you’re looking to refinance your mortgage, your credit score is the first thing lenders will look at. So before you start shopping around for lenders, you better know what you’re working with—because if your credit sucks, you won’t get the best rates.
You can order a free copy of your credit report from Equifax and TransUnion once a year, so that’s the first step in this process. But you have to personally review it (and preferably have someone else check it too) because there are often errors on your credit report that can hurt your credit score.
Once you’ve got your report in hand, check out the numbers. What number should you be looking for? The minimum credit score needed to refinance a mortgage is a Fico score of 680 or above. But really, this number comes with a caveat: you want good credit if you want to remortgage your home.
What if you’re looking to refinance your mortgage, but you have bad credit?
You’re probably worried that you won’t get approved with a home refinance if you have bad credit, but don’t panic! It’s not the end of the world. While having bad credit makes it more difficult to refinance your mortgage, it doesn’t make it impossible. There are options for you even if your credit has taken a hit.
While you may not be able to refinance through a big-name bank, they do have competition—and that competition is often willing to work with people who have less than perfect credit. Consider working with smaller banks and credit unions if you’re considering refinancing your mortgage and have bad or fair credit.
These lenders are often willing to take on lower-score people because they don’t have as many clients as big guys. Shop around and compare rates to get the best possible deal!
Refinancing is a great way to lower your monthly payments or change your loan terms. But like when you applied for your first mortgage, you’ll need to meet specific requirements to qualify for refinancing. So it’s still more challenging if you have bad credit, but it’s not impossible.
Final Thoughts
So there you have it! We’ve covered all the bases (and more) regarding what credit score is needed for a home remortgage. Now, you’re ready to take on the world of refinancing!
