Credit Score Mortgage Guidelines For Home Purchase And Refinance

This Article Is About Credit Score Mortgage Guidelines For Home Purchase And Refinance 

What is a Good Credit Score And Credit Score Mortgage Guidelines:

  • Credit Score Mortgage Guidelines varies between mortgage loan programs
  • All loan programs, with the exception of VA Loans, has minimum Credit Score Mortgage Guidelines
  • Lenders look at borrowers with good credit scores as fewer risk borrowers
  • Borrowers with higher credit scores often get better mortgage rates
  • Some think 640 credit score is a good credit score on FHA Loans
  • However, a 640 credit may be a good credit score on FHA Loans but may be a very low credit score on conventional loans
  • Home buyers who plan on buying a home in the very near future should consider raising their credit scores to get the best mortgage rates
  • Same for homeowners needing to refinance
  • Remember that higher credit scores mean lower mortgage rates

In this article, we will cover and discuss Credit Score Mortgage Guidelines For Home Purchase And Refinance.

Importance Of Good Credit ScoresCredit Score Mortgage Guidelines

Your credit score affects your life in more ways than one.

  • When you apply for a loan or credit cards, lenders make their decisions in part on your credit health
  • Not only that, but your credit score can affect the interest rates you’ll pay for car loans, credit cards, lines of credit and mortgages

FICO or credit scores range from 300 to 850. With the higher scores using lower credit risk. Knowing where you credit scores at all times is important to getting the best rate possible on any type of credit.

Credit Score Mortgage Guidelines And Difference Between Good And Bad Credit

The difference between bad credit and good credit scores may only be just a few points but it can make a world of difference when getting financing.

FICO scores are used by lenders who decide whether a credit score is excellent, good, fair, poor or bad. Below is a credit score range.

  • Excellent                                                      750 and above
  • Good                                                             700 to 749
  • Fair                                                                650 to 699
  • Poor                                                               550 to 649
  • Bad                                                                 549 & Below

Reason Credit Scores FluctuateWhy Credit Scores Fluctuate

Most lenders consider a credit score between 700 to 740 to be good, but the cutoff can be anywhere between 620 to 699:

  • So a drop of just one point can really have an effect on your rate
  • Remember credit score are not fixed They can fluctuate on a daily basis with every payment, every monthly balance, every account
  • You have credit reports at each of the three bureaus: Equifax, Experian, and Transunion
  • The credit scores for each report can be different because not every creditor reports to all three

Credit Reporting Agencies

Each bureau calculates your credit score.

  • Your credit score can change from month to month
  • Credit scores are formulated based on  payment history, the amount of available credit you have and use, whether you have applied for new credit and the types of credit you use and the age of your credit history

Mortgage Companies And Credit ScoresWhat does Mortgage Companies do?

There are various credit scoring models. Mortgage lenders use the FICO 2 scoring model:

  • FICO uses filters that the bureaus use to calculate scores
  • Depending on what type of credit you wish to obtain the filters will vary with different vendors whether it’s a car loan a credit card company or a bank they all use different filters

When it comes to buying a house, your credit score is important, not only for approval but also to determine your interest rate. So you usually need a credit score of 620 or better to qualify for a conventional loan, VA or FHA loan. Of course, you can use a mortgage broker that has the ability to do loans as low as 500 credit scores but there will be limitations.

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