Can I Qualify for a Mortgage Loan With Credit Issues in WA?

May 10, 2017
Last updated:
November 24, 2021
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Summary: Do you know what your credit score is? Moreover, do you know what credit score you need to get a mortgage in Washington state? Read on to find out more.

Is my credit score good enough to qualify for a mortgage loan? Can I get a home loan in Washington State with credit issues in the past? These are common questions among home buyers who need mortgage financing. Here’s what you should know about the relationship between credit scores and home loans.

Overview: Qualifying for a Mortgage Loan in Washington State

We’ve addressed some of the basic mortgage requirements in Washington in a previous blog post. Here’s a quick recap:

When you apply for a home loan in Washington State, or anywhere else for that matter, the bank or lender will review all aspects of your financial situation. This will include such things as your debt-to-income ratio, bank statements, employment status, and credit score.

This review process will tell you (A) if you’re qualified for a mortgage loan, and (B) how much you are able to borrow based on your income and debts.

Why Credit Scores Are Important

Credit scores play an important role in the Washington State mortgage underwriting and approval process, and for several reasons.

Your credit score essentially shows how you have borrowed and repaid money in the past. It is computed based on the information contained within your credit reports, which are maintained by TransUnion, Experian and Equifax.

A higher score will improve your chances of qualifying for a mortgage loan in Washington, while a low score might make it harder to obtain financing. This three-digit number can also affect the interest rate you receive. Generally speaking, Washington State home buyers with higher credit scores tend to get lower rates on their mortgage loans.

Related: Score needed to buy a house

Credit Issues Don’t Haunt You Forever

Many Americans have had credit issues in the past. In fact, there’s a long list of things that can lower your credit score. Late or missed payments on credit cards are one of the most common issues, but there are many more.

Just a couple of years earlier, nearly one-third of all Americans had a score lower than 601 (which is generally regarded as the distinction between “bad” and “fair” credit). So it’s fairly common. But as of late, for the first time, the average credit score among Americans across the nation now sits at 704, according to FICO.

The good news is that credit issues don’t haunt you forever. Negative entries can stay on your report for up to seven years in most cases, but their impact tends to lessen over time. In other words, you can rebound from past credit issues. Keep this in mind when applying for a mortgage loan in Washington State.

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The Big Picture Is What Matters Most

Credit scores are an important part of the mortgage approval process in Washington State. But there’s a much broader picture to consider as well.

When considering a loan application, banks and mortgage companies tend to look at all aspects of the applicant’s financial picture. This includes income, employment, debts, payment histories, and — yes — the credit score.

Because of this “big picture” analysis, a relatively low credit score by itself isn’t necessarily a deal-breaker. For example, if a borrower has recovered from credit issues in the past, and also has a long history of making debt payments on time, he or she could still qualify for a Washington State mortgage loan.

Also, it’s important to point out that some mortgage programs are more forgiving, when it comes to borrower credit scores. The Federal Housing Administration (FHA) home loan program tends to have more flexible criteria, because the loans are insured by the federal government. Likewise, the VA mortgage program for military members can be more lenient than a “regular” conventional loan.

The bottom line is that it’s possible to qualify for a mortgage loan in Washington State with credit issues in the past. But the only way to find out where you stand is by speaking to a lender.

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Have questions?

Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have mortgage-related questions.

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