Advantages Of 620 FICO Versus 580 FICO Credit Score
For a home buyer to qualify for a 3.5% FHA insured mortgage loan, the minimum credit score required is 580 FICO. FHA insured mortgage loan requirements are that the mortgage loan borrower have at least a 530 FICO credit score. However, if you have credit scores between 530 FICO and 580 FICO, the minimum down payment requirement to qualify for a FHA insured mortgage loan is 10% down payment. Any credit scores at 580 FICO and higher only require a 3.5% down payment.
Even though you only need a 580 FICO credit score to qualify for a FHA insured mortgage loan, there are huge advantages on having a 620 FICO versus 580 FICO credit scores when it comes to mortgage qualification process.
Some Advantages Of Having 620 FICO Versus 580 FICO Credit Scores
There are many advantages of having a 620 FICO versus 580 FICO credit scores. One of the biggest advantages of having a 620 FICO versus 580 FICO credit scores is the debt to income ratios. For any mortgage loan borrower with a credit score of lower than 620 FICO, the maximum back end debt to income ratio allowed is 43% debt to income ratio for FHA insured mortgage loans. However, if your credit scores are over 620 FICO, you back end debt to income ratio requirement jumps to 56.9%. Granted that mortgage lenders can have mortgage lender overlays, however, I have wholesale lenders that have no mortgage lender overlays and will be able to approve and close your mortgage loan with a back end debt to income ratio up to 56.9%. Other advantages of having 620 FICO versus 580 FICO credit scores are lower mortgage rents, no verification of rent, and less credit tradeline requirements.
Quick Fixes To Get Your Credit Scores Up To 620 FICO Or Greater
If your credit scores are below 620 FICO, there might be some quick fixes where you can boost your credit scores over 620 FICO. Some of the quick fixes to boost your credit scores over 620 FICO or higher might be just paying down your credit cards to below the 30% balance of your total credit limit. Other quick fixes might be adding one or more secured credit cards with a minimum of a $500 credit limit. These two strategies are sure quick fixes that can boost your credit scores by 20 or more points and get you over the 620 FICO credit score threshold.