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What kind of credit do I need to qualify for a NYC co-op?

Be prepared to explain if there are any blemishes on your credit report. 

Flickr / angela n.

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Question:

Will a co-op board look at my credit score? What's considered a good or bad score? How do a co-op board's standards compare to what a mortgage bank wants to see?

Answer:

A high credit score can certainly make it easier to get a co-op board's approval, but it's not the sole deciding factor, our experts say.

A score within the 700 to 800 range is considered very good, but building your credit to such a point requires having multiple lines of credit—through cards, mortgages, and car or student loans—all of which you pay down reliably. If you don't have enough of these, your score will be lower; late payments will also bring down your score. 

It's the latter that poses a bigger problem for co-op boards.

"Co-ops are primarily concerned about late payments and defaults," says Deanna Kory, a broker with Corcoran. "So if you have a default or late payments, and you are not able to satisfactorily explain them, then even if your score in in mid-700s, a co-op will be very concerned about you." 

Co-ops can vary in their expectations of buyers, so if your credit poses a potential concern, do some research ahead of time about what the board is looking for. 

"It is always best to have a conversation with your real estate agent and the listing agent upfront to find out any requirements that the co-op board may have in a building you are looking to purchase into," says Brittney Baldwin, vice president of National Cooperative Bank (a Brick sponsor.) "Make sure that you are willing to explain if there is something on your credit that has happened in the past." 

A high credit score can also help you lock in a good rate on a mortgage. Of course, other factors—like your debt-to-income ratio and liquid assets—are critical as well, but a credit score below 640 can make it challenging to qualify for a conventional mortgage, according to NerdWallet

You should check your score yourself, ideally with all three credit bureaus, a few months before you begin shopping for a home. If your problem is too few lines of credit, consider opening more—and using and paying them off regularly. And if there's a black mark on your report from an unpaid bill, you'll have enough time to address it and let your credit score recover. (See Brick's guide to fixing your credit for more information.) 

You may find that co-op boards are more forgiving than lenders. 

"At the end of the day, if your score is lower only because of the lack of credit outlets, but you can prove that you have made payments on time, you may be a good credit risk for a co-op," Kory says. 


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