Let’s say (for argument’s sake) that I have an average credit rating among the big three (Experian, Equifax, and TransUnion) of about 675 or so and I’m looking to get a home for $110K or less…and let’s say (for argument’s sake) that I’m looking for it in someplace, like, oh, say, Rochester, Minnesota. Any idea what kind of loan rates I might be able to get? For argument’s sake, of course.
Honestly, 675 is not a bad score. Bankrate.com list 6.06% as the APR for mortgage rates on their front page. Usually adding 50 basis points to their front page number will give you what a real-life mortgagee with average but decent credit will pay without buying points.
In NY, NJ, and Conn, your FICO would be fine to get you the lowest conventional rates. It’s the loan amount that would make things a bit higher. However, if that loan amount is the average out in Minn, then you should be able to get the lowest rates there. If I were allowed to do loans in MN, I would be able to get you 6.25%
Again, this is because your loan amount is $110,000… NOT because of your credit score.
If you’re purchasing a home, and you don’t have much to put down, and you wanted a government loan… it’d be about 6.5%
this is all just for arguments sake, of course.
Wel, that’s pretty good news. What is usually considered the cutoff for a ‘bad’ credit rating? 650? 600? Lower?
Welp, it’s not as cut and dry as 'this number =‘s this result,’ but there are some easy guidelines
680 and above is usually considered the best credit. With this score, you will get all of the best rates, for all of the best programs.
however, with 620-680, in most cases, you can be aproved for conventional rates. (mind you this if for mortgages, not cars, etc)
below 620 there are a lot of factors that start to become very important in getting approval. It gets really complex, here, so if you want to know some of the variables, i can post them, but it’ll be a loooong post.
Mind you this is just a framework. If you have scores of 675 and you’re trying to go FHA, and you’ve had a late mortgage payment in the last 12 months, you can’t do it. FHA hates late mortgage payments.
Salary and your debt to income ratios also come into play, as well as other factors, but as I said, if all else is balanced, then the above numbers are a good start.
Oh, and btw, if your FICO is below 500, then you will most likely not be approved by anyone for a mortgage.