What credit score number do you need to buy a house? Everyone wants to know the magic answer to this question. Home buyers are concerned about their

credit score

because they know that their score carries a lot of weight when it comes to getting approved for a mortgage for a new home. The problem is that the complicated scoring system can make credit scores confusing, and the more you try to research scores, the more confused you can get.

Here’s what you really need to know. Your credit score is a numerical representation of the information in your credit report, which shows how you have borrowed and repaid money going back up to 10 years. Scores take into account

five

main financial factors:

1. Your payment history on loans and credit cards

2. The total amount you currently owe on all of your accounts

3. The length of your

credit history

(how long you have been borrowing)

4. Any new, recently opened accounts

5. The mix of credit you use (credit cards, auto loans, etc.).

Scores can vary depending on which bureau they’re coming from. There are three main bureaus: Experian, TransUnion and Equifax. Mortgage lenders can use data about a home buyer from any of the bureaus, along with proprietary formulas and other factors (like debt to income ratio) to assess risk- or in other words, to determine an applicant’s likelihood of paying back a loan.

Applicants with lower credit scores have a statistically higher probability of defaulting on their loans, and may be viewed as a higher risk to lenders. Those with higher credit scores may be viewed as lower risk to a lender. Their high score shows that they have been responsible with paying off their bills in the past. Applicants with lower scores may have a harder time getting approved for mortgages, but if they do get approved with their low score, they may end up paying more in interest. In a search for a home, it can pay to have good credit. Borrowers with better credit scores tend to pay lower interest rates.

There is no across-the-board requirement of a credit score for mortgage approval. Lenders each have their own formulas; some set the bar higher than others, and some are willing to work with buyers with lower scores.

Late payments can seriously lower a home buyer’s credit score, so it is important to make your payments on time. Overuse of credit cards (the amount of credit you use compared to the amount of credit available to you) can also lower one’s score. If your credit cards are maxed out, this may be seen as a higher risk to lenders. Consider checking your

credit report

at the onset of your home search to know where you stand in the eyes of a lender.