Secured credit cards are you best tools to increase credit scores
If you are planning on qualifying for a mortgage loan, many loan programs have minimum credit score requirements. Certain minimum thresholds are the following:
530 FICO, 580 FICO, 620 FICO, 640 FICO, 660 FICO, 680 FICO, 720 FICO, 740 FICO, 760 FICO.
For example, if you have credit scores below 580 FICO, you need to put 10% down payment for a FHA insured mortgage loan. Any credit scores between 530 FICO and 580 FICO, the minimum down payment required is 10% down. If you want a mortgage loan with only a 3.5% down payment, you need a credit score of over 580 FICO. However, with a FICO credit score of 580 and 620, the maximum back end debt to income ratio cannot be greater than 45% . For those with back end debt to income ratio higher than 45% but less than 56.9%, their credit scores need to be at least 620 FICO.
What if your credit score is on the border line on a cutoff score
If you have a credit score of 577 FICO but do not have the 10% down payment and have a 3.5% down payment to put down towards a home purchase, you need would need a minimum credit score of 580 FICO. The 580 mark is the minimum credit score you need to qualify for a 3.5% down payment home mortgage loan. However, you will have a maximum of a 45% back end debt to income ratio. If your debt to income ratio is as high as 56.9%, the minimum credit score required is 620 FICO.
How can I increase my credit scores
The fastest and easiest way to boost your credit scores is by getting secured credit cards. Each secured credit card can boost your credit scores by at least 20 or more points. Depending on your credit profile, you can easily boost your credit scores by 60 or more points by getting 3 secured credit cards. Most mortgage loan originators will recommend their mortgage loan borrowers who need credit score improvements to get secured credit cards.
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