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Your Credit Score
Your credit score is a numerical representation of your credit history (from student loans, credit cards, auto loans, etc) that a lender uses to determine the likelihood of whether or not a borrower (you or I) is a safe investment. When applying for a loan, you will almost always authorize your mortgage loan consultant to pull your credit with personal information you furnish, to immediately get a snapshot of how likely it is that you will be able to move forward towards your home loan.
Despite what many may believe, lower credit scores will not immediately prevent you from being able to get a home loan. It will, however, affect the rate for which you qualify, as described later on.
Credit or FICO scores range from as low as 300 and as high as 850 in the United States. However, for most lenders to provide a borrower competitive rates, the minimum credit score required is usually 630. It is not impossible to receive a loan with lower credit, but most lenders, especially in today’s market, see that point as the lowest they are willing to go, and as such, you will have a much more difficult time.
Credit scores in the 700 and above range will generally warrant little to no additional scrutiny, and will often afford a borrower with the best available rate from most lenders.
With the tightening regulations affecting the mortgage industry these days, better and better credit is being required to receive optimal loans, but never let yourself fall into the trap of believing that your credit score will be all that effects your loan eligibility, for worse or for better.