Doctor loans are great for several reasons. In many situations they can remove the need for a down payment, they don’t require mortgage insurance, and yet they still offer great rates on both fixed and adjustable rate mortgages. There are key pieces of the puzzle though that can help make or break a deal: stable income, sufficient reserves, a relationship with the bank, and a good CREDIT score.
Having good credit is often overlooked and not a top priority for busy residents and doctors early in their careers. Most banks have a minimum credit scare requirement around the 700 mark. Your credit score can be the difference in whether or not you can be approved for a mortgage to purchase a new home. Also, it is often the deciding factor on whether or not you are approved for 95-100% financing or need to bring a down payment to closing.
A common question is- How is my credit score determined? Your score is basically determined by how you use credit, for example:
- Number of open and active trade lines are on your report
- Whether or not you pay on time
- How much of your limit you use on revolving accounts (like credit cards)
- How long have accounts been opened?
There is a lot more involved with a credit score and how scores are calculated but the above list is the most important items. Some examples of what is not used to generate a score:
- Your income
- Items like cell phone, power, cable, insurance, rent (except if one of these turned delinquent then it would likely be reported.
In summary, may factors go into your over all scoring. By knowing what key activities affect your score, you can quickly improve or maintain the score needed to qualify for a Doctor Loan.