Which Credit Score Is Needed for a Mortgage Loan?
Reader Question: Which credit score is needed for a mortgage loan?
This question could mean one of two things, and I'm not sure which way it leans. So I'll address both angles.
Angle 1: If you mean to ask what credit score you need in order to get approved for a mortgage loan, then it's a hard question to answer right now. A lot has changed over the last few months (and this is still ongoing), so all of the old "rules of thumb" have been altered.
In the past, a credit score of 620 used to be commonly cited as the "magic number," above which you would qualify for the best interest rates on a loan. You could still qualify below that, but you certainly would not have received the best rates -- you would have been considered a subprime borrower.
But all of this has changed. Today, you need a higher credit score to do just about everything, and that includes qualifying for a mortgage loan. This article explains why. To get the best rates on a home loan today, you would probably need a 720 or above. But who knows what the situation will be 30 or 60 days from now. There's a lot of uncertainty in the air, and many lenders are still operating in "survival mode" right now.
The only way to find out if you can get approved for a loan is to apply for one. You can use the tools listed on the right side of this page to get online mortgage quotes.
Angle 2: If you mean to ask which of your three credit scores a mortgage lender will consider, then here is my response. You have three main credit scores, and they are based on the information provided by the three credit-reporting agencies (TransUnion, Experian and Equifax). The FICO score produced by Experian is the one most commonly used by mortgage lenders. With that said, many of them will use a merged score that averages out the three ... or they'll look at two out of the three scores to come up with their own average.
You can learn more about this subject from the credit information section of our website.
This question could mean one of two things, and I'm not sure which way it leans. So I'll address both angles.
Angle 1: If you mean to ask what credit score you need in order to get approved for a mortgage loan, then it's a hard question to answer right now. A lot has changed over the last few months (and this is still ongoing), so all of the old "rules of thumb" have been altered.
In the past, a credit score of 620 used to be commonly cited as the "magic number," above which you would qualify for the best interest rates on a loan. You could still qualify below that, but you certainly would not have received the best rates -- you would have been considered a subprime borrower.
But all of this has changed. Today, you need a higher credit score to do just about everything, and that includes qualifying for a mortgage loan. This article explains why. To get the best rates on a home loan today, you would probably need a 720 or above. But who knows what the situation will be 30 or 60 days from now. There's a lot of uncertainty in the air, and many lenders are still operating in "survival mode" right now.
The only way to find out if you can get approved for a loan is to apply for one. You can use the tools listed on the right side of this page to get online mortgage quotes.
Angle 2: If you mean to ask which of your three credit scores a mortgage lender will consider, then here is my response. You have three main credit scores, and they are based on the information provided by the three credit-reporting agencies (TransUnion, Experian and Equifax). The FICO score produced by Experian is the one most commonly used by mortgage lenders. With that said, many of them will use a merged score that averages out the three ... or they'll look at two out of the three scores to come up with their own average.
You can learn more about this subject from the credit information section of our website.
Labels: Credit scores
posted by Brandon at
11:10 AM
