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Credit scores are among the many things lenders review when you apply for a mortgage, because scores are designed to predict how likely you are to meet your debt obligations. After the mortgage crisis, lenders were hesitant to take on risky borrowers, and at the end of 2012, the average FICO credit score for a closed mortgage was 748, according to mortgage software company Ellie Mae.

A year later, that average has dropped to 727, which indicates increased loan access for homebuyers with lower credit scores. Having a great or poor credit score doesn’t necessarily mean you’ll be approved for or denied a mortgage, but it plays a large part in the decision. FICO scores, the model used in Ellie Mae’s Monthly Origination Insight Report, range from 301 to 850, with “good credit” including scores between 700 and 749. Though the average score of someone who gets a mortgage went down in December 2013, the numbers suggest consumers with good or excellent credit still make up the bulk of new home loans.

You may not need a credit score of at least 727 to get a mortgage, but it could help. Credit scores remain a large obstacle for aspiring homeowners, even as other risk indicators become increasingly accepted by lenders. According to a CoreLogic report outlining originations in October 2013, mortgages with a high loan-to-value ratio (more than 90%) were being issued at normal (pre-housing bubble) levels, as were loans to borrowers with a high debt-to-income ratio. Borrowers with low credit scores haven’t seen the same rebound.

Figuring out where you stand

It helps for consumers to get an idea of where their numbers fall before shopping for a house. For instance, you can calculate your debt-to-income ratio by adding up your monthly debt obligations and expected monthly mortgage payment and divide it by your monthly income. That way, you know if you should reduce your debt load before applying for a mortgage.

Similarly, you can check your credit scores and see if they need work. It’s a good idea to periodically review your credit scores (Credit.com gives you two through the free Credit Report Card) as a motivator for keeping your finances on track, as well as spot potential identity theft, but it really helps to know where you stand when it comes time to apply for new credit.

Lenders consult different scoring models — there are lots of them — but the most helpful thing is to compare the same score over time as a way of measuring improvement in areas like payment history and debt usage. If you have a past littered with late payments and a tendency to max out your credit cards, lenders aren’t going to rush forward with mortgage offers. Focus on your existing credit before you ask for more.

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