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How does your credit score compare to the average homebuyer?

How does your credit score compare to the average homebuyer?

By Ron Trujillo/

Welcome to the spring-buying season, when curb appeal and fresh paint work wonders.

It’s also a good time for home shoppers to curb their debt and deal with financial issues before hitting mortgage lenders and open houses. Just as a good-looking front yard catches your attention, a solid credit score lures mortgage lenders.

But what qualifies as good (or bad) credit for home shoppers?

California is a rather competitive housing market, where buyers easily exceed the homes listed on the market. It’s also rather competitive when it comes to credit scores.

Homebuyers in the state had an average credit score of 747 during the fourth quarter, the second-highest score in the nation behind only Washington, D.C., according to CoreLogic. A great score for homebuyers, but only 10 points above the national average of 737. Only four states were below 725.

About 40% of consumers have credit scores of at least 750 (see chart and sidebar).

CoreLogic did not release state-by-state averages for the first 1% and top 99% credit scores. But 628 was the average credit score nationwide for the first 1% and 815 for the top 99% during the fourth quarter.

California homebuyers also scored well in another category – the lowest loan-to-value ratio (or on the flip side the largest down payment) at 80.1%. For example, the average consumer buying a $500,000 home had a loan down payment of about $100,000.

Before you get too disappointed about the average down payment, please remember the figure includes move-up buyers who likely have a ton of equity with the recent run-up in prices, international buyers and investors. There are still plenty of homebuyers with much smaller down payments, including 3% and even 1%.

Featured photo by RedPixel.PL/Shutterstock.

Credit check

Five factors are considered to determine credit scores, and you should address each one to boost your chances of home ownership.

Payment history is the biggest component at 35%, followed closely behind by amounts owed at 30%. Length of credit history accounts for 15% of the credit score, while new credit and the types of credit are 10% each.

Almost three of every five consumers (58%) have a credit score of at least 700, and 13% are in the 800-plus club (see chart, left).

Consumers should check their credit scores a few times per year with the three credit agencies — Equifax, Experian and TransUnion — and address any errors as soon as possible. Also, check your credit score before applying for a mortgage, easing the possibility of a surprise.

Photo by Ti_ser SS/Shutterstock.

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