Low Credit Score vs. Mortgage Approval

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Many people who have a low credit score are often times afraid to go get approval for a mortgage loan because they feel they will get denied. While your credit score is an important part of the approval for lenders, it is not the only thing they look at during the process.

The most important thing to know about your credit score, is the number itself and what it means. You might have a better score than what you think. Credit scores are broken down like this.

Excellent Credit Score = Above 720

A credit score this high is where most people would like to be. This is where the lowest interest rates are and where most lenders feel the best when handing out loans and mortgages.

Good Credit Score = 680 – 719

This is a good credit score if you fall into this range. The interest rates will not be as good as the above level but most of the time lenders feel safe if you are here. If you are in the market for a refinance, this level is a good level to be at when faced with that.

Average Credit Score = 620 – 679

If you want to get a good interest rate for a mortgage, this is the lowest you will need to be at. Anything below this becomes difficult.

Poor Credit Score = 580 – 619

At this level you are still able to get a mortgage but it will cost you. Ones who fall into this level will see higher lender interest rates and other fees.

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Bad Credit Score = 500 – 579

People who fall into this category will pay for it. These borrowers see the really high interest rates for mortgages. Although it is not impossible, it is costly.

Terrible Credit Score = Anything below 500

At this level you really need to get focused on getting your score up for the future. Most people in this range need professional finance help.

The chart shows that although a high credit score is important, it does not make it impossible to get a mortgage with a low score. Actually, so far in 2014, lower credit score applicants are getting approved at a higher level than that of last year. The percentages show that about 35% of all mortgage approvals came from credit scores that were below 700.

Many of the lenders are letting lower credit score applicants get mortgages for a few reasons. One of the reasons is that lenders realize that the economy took a really hard hit a few years back and many people lost their jobs due to the economy. That in itself could be to blame for the lower credit scores. Also, lenders are looking at a more recent payment history on items. This information can be very helpful. If you have proven that in the past year or so there have been a large percentage of payments made to companies on time is a good sign for them.

It is good information for people to know that if they have a low credit score they can still go get approved for a home mortgage. There is no reason to be afraid of a denial. Many lenders are out there working hard to help those who have a low score but show signs they can pay.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

One Response to Low Credit Score vs. Mortgage Approval

  1. Janet Rabideau says:

    I would like to appley for a mortgage, but my credit score is a 561

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