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Every week, 3,800 more people move into homes in Texas than move out. In 2021, the state saw 416,853 home sales, which was a 5.9% increase from the previous year, and the median home price in Texas as of January 2022 was $376,363, having risen 16% from the previous January. If you’re looking to buy a house in Texas, expect a healthy market with lots of demand and competitive pricing. 

Generally speaking, you need a FICO® credit score of at least 620 to be approved for a conventional loan in the United States. However, having a score above 700 significantly increases your chances of getting approved and securing a lower interest rate.

Keep reading to find out more about the Texas market so you can prepare yourself for purchasing a home in the Lone Star state. 

What is a credit score?

A credit score is measurement used by lenders to determine your creditworthiness (or the likelihood of you paying off your debts). The most commonly used score is the FICO credit score, which generally ranges between 300 and 850; the higher your credit score, the less risky you’re deemed as a borrower.

Credit scores are based on the information from your credit report, including data about your current loans and balances, your payment history, your outstanding debts, and incidents of bankruptcies. More specifically, your credit score is made up of five factors, each of which is weighted differently:

• Payment history: 35 percent
• Amounts owed: 30 percent
• Credit history length: 15 percent
• Credit mix: 10 percent
• New credit: 10 percent

Credit scores are commonly broken down as follows:

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

How does my credit score affect my mortgage interest rates?

For a conventional mortgage, your credit score is one of the main factors considered when reviewing your mortgage application. For this reason, many people try to improve their credit score when they know they’ll be purchasing property in the next few years. Your credit score can also impact how large a mortgage you qualify for, your interest rate, and the loan terms

As your mortgage is such a large loan, securing the best interest rate possible is crucial. A difference of 1 percent in your mortgage loan can cost you significantly. For example, let’s look at a person purchasing a $300,000 home with a 30-year loan term. The difference between securing an interest rate of 5.50 percent and 5.25 percent means paying nearly $17,000 more in interest over the life of the loan.

What credit score do I need to buy a house in Texas?

You’ll need a score of at least 620 to be approved for a conventional loan in Texas, but there are many options for you if your score sits below 620 (see below). Remember, mortgage lenders look at your credit score in conjunction with other financial factors when determining if you qualify for a loan. 

Unfortunately, even a score of 620 doesn’t guarantee loan approval. Ideally, prospective buyers in Texas should aim to have a credit score of 760 or greater to increase the chances of approval and securing the best interest rate possible. 

What is the average credit score needed to buy a house?

Generally, the higher the credit score, the better your chances of getting accepted for loan approval. The good news is that if you don’t qualify for a conventional loan (minimum credit score of 620 required) there are many other options for home loans for your to look into. 

The different types of mortgage loans and their minimum credit score requirements are:

• Conventional loan: Credit score of 620 or higher and a 3% to 5% minimum down payment.
• USDA loan: If you’re looking to purchase rural property in Texas, you could potentially qualify for a loan from the USDA’s Single-Family Housing Direct Home Loan Program. USDA loans don’t technically have minimum requirements, but typically borrowers need a credit score of at least 640 to qualify. 
• VA loan: The Veteran Benefits Administration offers qualifying veterans, service members, and spouses VA loans, a type of government-backed mortgage. Similar to the USDA loan, the VA loan doesn’t have a minimum requirement, but people typically need a score of at least 640 to be approved. 
• TDHCA loans: Texas has two state-specific programs to help individuals purchase a property: My First Texas Home and My Choice Texas Home. My First Texas Home is available to all first-time homebuyers, veterans, and homebuyers who haven’t purchased a property in the last 3 years that meet certain income guidelines. My Choice Texas Home is a program for those who don’t qualify for the My First Texas Home program. Both of these programs have a minimum credit score requirement of 620. 
• Federal Housing Administration (FHA) loan: FHA loans require a credit score of at least 580, with a down payment between 3.5%-10%. However, lenders with a score between 500 and 579 may still qualify if they have a down payment of at least 10%. 

Can I get a mortgage with bad credit?

Yes, it’s possible to get a mortgage with bad credit. As listed above, many programs work with people with lower credit scores. Often, being strong in other areas—such as having a sizable down payment—can make up for a low credit score. 

Remember that getting a mortgage with poor credit likely means you’ll get a high interest rate and less favorable lending terms. This means your mortgage will likely cost you more, so it can be very beneficial to focus on improving your score before you apply. 

What other factors do mortgage lenders look at?

Your credit score is an integral part of your mortgage application, but it’s not the only thing mortgage lenders look at. They may also consider:

• The size of your down payment 
• Income and savings
• Employment history 
• Debt-to-income (DTI) ratio
• Bank statements
• 1-2 years of tax returns 
• The assessed value of your home

How can I raise my credit score?

If you’re not already in the home buying process, you likely have the time to work on improving your credit score. Some actions you can take to improve your credit score are:

• Paying down existing debts
• Making sure you pay all your bills on time and in full, if possible
• Keeping your credit utilization under 30 percent
• Keeping your oldest accounts open (even if you don’t use them)
• Avoiding applying for new credit, so you don’t have hard inquiries into your account

Also, you’ll want to review your credit report and ensure you don’t have any inaccurate or false information on your file. Errors on credit reports are common and can drag your score down unnecessarily by several points. When you find a mistake, you have the legal right to file a dispute to have it removed from your credit report.

If you need help with the credit repair process, consider hiring the advocates at CreditRepair.com. We can review your credit report with you, help you find errors and file disputes, and give you credit education. Online consultations are free. Start now!

Note: The information provided on CreditRepair.com does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only.

The post What is the credit score needed to buy a home in Texas? appeared first on CreditRepair.com.

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Disclosure regarding our editorial content standards.

If your finances are stressing you out, you have the option of filing for bankruptcy. Keep reading to learn what bankruptcy is, find out about the differences between Chapter 7 and Chapter 13 bankruptcy and learn what steps you need to take to file bankruptcy in Texas.

What is bankruptcy?

Bankruptcy is a legal process that helps people who are struggling to pay their debts. When you decide to file for bankruptcy in Texas, you file a petition with a federal bankruptcy court. The petition provides information about your income, assets, expenses and debts. It also indicates whether you want to file a Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Chapter 7 bankruptcy

In a Chapter 7 bankruptcy, the trustee collects any property that isn’t exempt, sells it and uses the proceeds to pay your creditors. To qualify for this type of bankruptcy, you must pass a means test, which determines whether you have enough disposable income to repay your debts.

Chapter 13 bankruptcy

Some people have too much disposable income to file for Chapter 7 bankruptcy. If you’re one of them, you may be able to file for Chapter 13 bankruptcy instead. Chapter 13 allows you to set up a plan for repaying some or all of your debts. Depending on how much you earn, your repayment plan may last for three to five years, during which time you’ll make payments to your creditors.

One of the benefits of filing for Chapter 13 bankruptcy is that it gives you an opportunity to catch up on missed mortgage payments, which may help you prevent foreclosure. You may also be able to lower your monthly payments on other debts.

How to file for bankruptcy in Texas

The bankruptcy rules are outlined in Title 11 of the U.S. Code, so bankruptcy is a federal matter. That said, Texas is one of the states that allows filers to choose whether to use the state exemptions or the federal exemptions. As a result, filing for bankruptcy in Texas is a little different from filing in many other jurisdictions. Here are the basic steps you need to take to file for bankruptcy in the Lone Star State.

1. Visit the United States Courts website to learn more about bankruptcy.
2. Determine if you qualify for bankruptcy. For both Chapter 7 and Chapter 13, you can’t file if you had a bankruptcy dismissed within the previous 180 days due to your failure to comply with the court’s instructions or appear before the court when required. The 180-day rule also applies if your bankruptcy was voluntarily dismissed because your creditors asked the court to grant them relief related to certain assets.
3. Think about hiring an attorney. Bankruptcy is a complex process, and your case could be dismissed if you make a mistake on your petition or any other forms you file. An attorney can advise you on whether bankruptcy is the best option for your situation, help you determine if you qualify for Chapter 7 or Chapter 13 and guide you through the process from beginning to end.
4. Gather supporting documentation and fill out the required bankruptcy forms. You’ll need documents related to your income, expenses, assets and debts, so look for tax returns, pay stubs, 1099 forms, copies of your monthly bills, bank statements, credit card statements, loan agreements and other related paperwork.
5. Stop making payments on qualifying (dischargeable) debts. Since those debts are going to be discharged anyway, it doesn’t make sense to keep paying them when you could use the money to pay debts that don’t qualify for discharge. An attorney can advise you on which debts qualify for discharge so you don’t stop making payments on the wrong accounts.
6. Take a credit counseling course. All filers are required to participate in credit counseling, regardless of whether they file for individual bankruptcy or business bankruptcy.
7. Complete and file your bankruptcy petition, along with all the supporting documents required to verify that you qualify.
8. Attend the 341 meeting of the creditors. During this meeting, the bankruptcy trustee asks you questions about your petition and supporting documents. Your creditors also have an opportunity to attend the meeting and ask questions related to your case.
9. Complete your pre-discharge debtor education course, file your course certificate and receive your debt discharge.

What are the Texas bankruptcy exemptions?

Bankruptcy exemptions allow you to protect certain property from your creditors. In Texas, some of the state exemptions are more favorable to filers than the federal exemptions, making it wise to discuss your situation with an attorney and determine which set of exemptions to use.

• Texas homestead exemption: Texas allows most filers to exempt the full value of their homes in a bankruptcy. This applies to residences on 10 acres or less in a city or 100 acres or less in the country.
• Texas motor vehicle exemption: Under Texas law, you can exempt the full value of one vehicle per licensed household member.

Texas also allows filers to exempt some of their personal property. For a single individual, personal property is exempted if it has a total market value of no more than $50,000. If personal property is provided for a family, then it’s exempt as long as it has a total market value of no more than $100,000.

Wages, health aids prescribed by a doctor, religious books/texts and alimony/support payments are exempt, but they’re not included in the market value limits above.

You should also be aware of the following personal property exemptions:

• Tools and vehicles used for farming or ranching
• Home furnishings
• Clothing
• Jewelry up to a certain limit
• Tools, books and equipment used for a job or trade
• Athletic equipment/sporting goods
• Two firearms
• Certain animals for consumption (e.g., 120 fowl, 12 head of cattle); exemption includes food for the animals
• Household pets
• Ingredients and equipment used to prepare meals/items for consumption

Will filing for bankruptcy in Texas erase your debt?

Chapter 7 bankruptcy wipes away most of your unsecured debt, giving you a fresh start. Unsecured debts are debts that aren’t secured by any collateral, such as credit cards, past-due utility bills, medical bills, personal loans and collection agency accounts.

Chapter 7 bankruptcy doesn’t eliminate spousal support or child support payments, court fines, criminal restitution, debts to government agencies and certain other types of debts. Chapter 13 bankruptcy doesn’t erase your debt; it just allows you to set up a repayment plan with your creditors.

What property will you get to keep after filing?

You should be able to keep anything that’s considered exempt, such as your home, clothing, home furnishings and tools you use for your job.

If you have personal property with a market value above the exemption limit ($50,000 for individuals and $100,000 for families), the trustee may sell some of the excess property and use the funds to repay your creditors. It all depends on which type of bankruptcy you file, what kind of property you own and other factors.

Is bankruptcy the right choice for you?

Again, it depends on your situation. If you have a lot of unsecured debt and don’t own your own home, bankruptcy may be a good option, as your unsecured debt will be wiped away and you won’t have to worry about finding a new place to live.

Even if you do own a home, bankruptcy may be right for you if most of your debts are dischargeable and you want to stop the calls from collection agencies or prevent your creditors from taking legal action against you. If most of your debt isn’t the kind that can be discharged in a bankruptcy, however, you may want to explore other options.

Bankruptcy has a big impact on your credit score, so think carefully before you decide to file. A credit repair company can help you determine the right course of action.

Note: The information provided on CreditRepair.com does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only.

The post How do you file for bankruptcy in Texas? appeared first on CreditRepair.com.

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Every week, 3,800 more people move into homes in Texas than move out. In 2021, the state saw 416,853 home sales, which was a 5.9 percent increase from the previous year, and the median home price in Texas as of January 2022 was $376,363, having risen 16 percent from the previous January. If you’re looking to buy a house in Texas, expect a healthy market with lots of demand and competitive pricing. 

Generally speaking, you need a FICO® credit score of at least 620 to be approved for a conventional loan in the United States. However, having a score above 700 significantly increases your chances of getting approved and securing a lower interest rate.

Keep reading to find out more about the Texas market so you can prepare yourself for purchasing a home in the Lone Star state. 

What is a credit score?

A credit score is measurement used by lenders to determine your creditworthiness (or the likelihood of you paying off your debts). The most commonly used score is the FICO credit score, which generally ranges between 300 and 850; the higher your credit score, the less risky you’re deemed as a borrower.

Credit scores are based on the information from your credit report, including data about your current loans and balances, your payment history, your outstanding debts, and incidents of bankruptcies. More specifically, your credit score is made up of five factors, each of which is weighted differently:

• Payment history: 35 percent
• Amounts owed: 30 percent
• Credit history length: 15 percent
• Credit mix: 10 percent
• New credit: 10 percent

Credit scores are commonly broken down as follows:

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

How does my credit score affect my mortgage interest rates?

For a conventional mortgage, your credit score is one of the main factors considered when reviewing your mortgage application. For this reason, many people try to improve their credit score when they know they’ll be purchasing property in the next few years. Your credit score can also impact how large a mortgage you qualify for, your interest rate, and the loan terms

As your mortgage is such a large loan, securing the best interest rate possible is crucial. A difference of 1 percent in your mortgage loan can cost you significantly. For example, let’s look at a person purchasing a $300,000 home with a 30-year loan term. The difference between securing an interest rate of 5.50 percent and 5.25 percent means paying nearly $17,000 more in interest over the life of the loan.

What credit score do I need to buy a house in Texas?

You’ll need a score of at least 620 to be approved for a conventional loan in Texas, but there are many options for you if your score sits below 620 (see below). Remember, mortgage lenders look at your credit score in conjunction with other financial factors when determining if you qualify for a loan. 

Unfortunately, even a score of 620 doesn’t guarantee loan approval. Ideally, prospective buyers in Texas should aim to have a credit score of 760 or greater to increase the chances of approval and securing the best interest rate possible. 

What is the average credit score needed to buy a house?

Generally, the higher the credit score, the better your chances of getting accepted for loan approval. The good news is that if you don’t qualify for a conventional loan (minimum credit score of 620 required) there are many other options for home loans for your to look into. 

The different types of mortgage loans and their minimum credit score requirements are:

• Conventional loan: Credit score of 620 or higher and a 3 percent to 5 percent minimum down payment.
• USDA loan: If you’re looking to purchase rural property in Texas, you could potentially qualify for a loan from the USDA’s Single-Family Housing Direct Home Loan Program. USDA loans don’t technically have minimum requirements, but typically borrowers need a credit score of at least 640 to qualify. 
• VA loan: The Veteran Benefits Administration offers qualifying veterans, service members, and spouses VA loans, a type of government-backed mortgage. Similar to the USDA loan, the VA loan doesn’t have a minimum requirement, but people typically need a score of at least 640 to be approved. 
• TDHCA loans: Texas has two state-specific programs to help individuals purchase a property: My First Texas Home and My Choice Texas Home. My First Texas Home is available to all first-time homebuyers, veterans, and homebuyers who haven’t purchased a property in the last 3 years that meet certain income guidelines. My Choice Texas Home is a program for those who don’t qualify for the My First Texas Home program. Both of these programs have a minimum credit score requirement of 620. 
• Federal Housing Administration (FHA) loan: FHA loans require a credit score of at least 580, with a down payment between 3.5 percent and 10 percent. However, lenders with a score between 500 and 579 may still qualify if they have a down payment of at least 10 percent. 

Can I get a mortgage with bad credit?

Yes, it’s possible to get a mortgage with bad credit. As listed above, many programs work with people with lower credit scores. Often, being strong in other areas—such as having a sizable down payment—can make up for a low credit score. 

Remember that getting a mortgage with poor credit likely means you’ll get a high interest rate and less favorable lending terms. This means your mortgage will likely cost you more, so it can be very beneficial to focus on improving your score before you apply. 

What other factors do mortgage lenders look at?

Your credit score is an integral part of your mortgage application, but it’s not the only thing mortgage lenders look at. They may also consider:

• The size of your down payment 
• Income and savings
• Employment history 
• Debt-to-income (DTI) ratio
• Bank statements
• 1-2 years of tax returns 
• The assessed value of your home

How can I raise my credit score?

If you’re not already in the home buying process, you likely have the time to work on improving your credit score. Some actions you can take to improve your credit score are:

• Paying down existing debts
• Making sure you pay all your bills on time and in full, if possible
• Keeping your credit utilization under 30 percent
• Keeping your oldest accounts open (even if you don’t use them)
• Avoiding applying for new credit, so you don’t have hard inquiries into your account

Also, you’ll want to review your credit report and ensure you don’t have any inaccurate or false information on your file. Errors on credit reports are common and can drag your score down unnecessarily by several points. When you find a mistake, you have the legal right to file a dispute to have it removed from your credit report.

If you need help with the credit repair process, consider hiring the advocates at CreditRepair.com. We can review your credit report with you, help you find errors and file disputes, and give you credit education. Online consultations are free. Start now!

Note: The information provided on CreditRepair.com does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only.

The post What is the credit score needed to buy a home in Texas? appeared first on CreditRepair.com.

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