We recently received a question from a borrower regarding their credit score and thought this would be a great question to answer here on our website.
The borrower asked, “I have a credit score of 645, can I get a mortgage? Does my score affect my interest rate? What are the general rules of credit scores for mortgages (min score, max score and loan programs one can qualify for)?”
We get questions like this all the time and even though there is no black and white answer to this, here is a good general answer to the questions above:
Every loan product has its own guidelines and those guidelines may even vary from lender to lender also. As a general rule, a median score of 660 will likely get you into just about any loan product available, and some loans allow you to go as low as 600; but typically, the higher the score up to about 740, the better the loan terms. Anything 740 and above, as a median credit score, should qualify you for the best rates/programs available.
As a point of clarification, when lenders pull a borrower’s credit we pull from all three credit bureaus. Once the credit is pulled, the qualifying score is the median credit score, not the average of all three scores, as some people think. (ex. If a lender pulls credit scores and they are 701, 698 and 644, they will use the 698 credit score.).
If there is a borrower and a co-borrower on the loan, then lenders would use the lower of the two borrowers median credit scores for qualification (ex. Borrower has credit scores of 701, 698 and 644 and co-borrower has credit scores of 698, 677 and 622, we would have to use the 677 median credit score of the co-borrower for qualification as it is the lower of the two median credit scores.).
Hopefully this clears things up a little bit on credit scores and what we use as lenders to qualify a borrower.
Tip of the Day!
The fastest way to boost your credit scores BEFORE a lender pulls is to pay down as many debts as possible to under 30% of their available credit lines. This could boost your scores significantly and save you thousands on your next home loan! (ex. If you have a credit card with a credit line of $1000, never let the balance go above $299, and you will get the highest scores for that account)
If you have any questions for us please leave them in the comment section below. If you would like to get qualified for a home loan today, please fill out our Quick Inquiry and we will get started on the process right away.
Let’s say I am buying a house. Would it be better to use my credit score and my cosigner credit score which is a slight bit lower together or just use mines which is the highest?
No matter who is on the loan, lenders always use the lowest middle score of any/all borrowers on the loan. If a person can qualify with only their income AND they have the highest score of possible borrowers, then they should go it alone; if they need the extra income of a co-borrower, then they have to use the scores of the lowest middle score of all on the loan.