What should your credit score be to buy a house?

What should your credit score be to buy a house? Here's what you'll have to know about your credit before signing the dotted line on your next home.

If you're even considering the possibility of buying a house in the near future, your mind is probably already buzzing with questions about the homebuying process, borrowing to buy a house, and how to pay for the costs that turn up after the place is yours. What should your credit score be to buy a house? What's the best way to pay for furniture for your new house? 

We've got answers! Here's what you need to know about credit and buying a house.

Good credit is key to buying a home. That's because lenders see your credit score as an indication of how well you handle financial responsibility. That three-digit number gives them an idea of how risky it is to lend to you — after all, they want to make sure you pay back what you borrow, especially for a large purchase like a house. Your score could be the difference between getting an approval for a mortgage and getting turned down.

Your credit also impacts your mortgage approval another way: it might be used to help determine the rate and terms of your mortgage. If you have a higher credit score, you might get a lower interest rate or more flexible payment terms.

In Canada, credit scores range from 300 to 900. If your credit score isn't anywhere near 900, take heart. You don't need to have perfect credit to get a mortgage. In fact, as long as your credit score is in the 600-700 range, it should satisfy the credit requirements for your mortgage application with one of Canada's main financial institutions. If your score is below that, you might want to talk to a mortgage professional about qualifying for a mortgage through a different lender.

Keep in mind that your score is just one part of your mortgage application, and the lender will also review your household income and any debt you have to confirm that you can afford to make your mortgage payments.

Check your credit sooner rather than later. That way, if you find any credit issues on your report, you'll have time to take care of them and boost your credit score before a mortgage lender reviews your credit.

Applying for a mortgage preapproval, finding a home, getting the final mortgage approval, and then pulling off the final house closing often takes between six weeks and three months, but prepare for it to take longer. During this time, it's important to maintain good credit so nothing throws a wrench into your final mortgage approval.

To prevent any credit issues that could result in less favourable mortgage terms, prevent a final approval, or damage your credit, remember to do the following.

• Avoid completing multiple mortgage applications with different lenders in a short time frame. This may flag you as a credit seeker and lower your credit score.
• Hold off on applying for other credit, such as a car loan or a loan for household appliances, that could increase your total monthly debt payments.
• Make all existing credit payments, including car loans, car leases, student loans, credit cards, and credit lines on time and in full.

Buying a house involves more than simply making payments on your mortgage. The simple truth is that when you own a home, you're going to have house-related expenses. However, it's not always possible to drop large amounts of cash on big-ticket items like new appliances, home repairs, or maintenance.

• Use a low-interest credit card: one convenient way to pay for immediate, unexpected, or emergency home costs is with a credit card. Consider getting a low-interest card that you set aside for this purpose (and this purpose only) while you build an emergency fund. Remember to apply for the card after closing on your house, though, so you don't impact your credit. This gives you the option to fund an unexpected housing cost immediately. Use a credit card for things like an emergency furnace repair or an appliance service call.
• Use a line of credit: another option for larger home expenses or repairs is a line of credit. A line of credit works like a credit card in that you can borrow up to a limit. You only pay interest on what you borrow, and then make monthly payments to pay it back. Line of credit rates are often lower than credit card interest rates, and a strong credit score could reduce your rate even further.

Buying a home is exciting, but it's also important to consider the impact this large and complex purchase could have on your finances and credit. If you're a first-time homebuyer, it's important to get accurate professional advice about credit and buying a house, so take it slow and do it right. A wonderful home and good credit aren't far out of your reach.