Monday, July 11, 2011
Maximizing Your Credit Score
High credit scores mean lower mortgage rates and lower credit scores mean higher mortgage rates. That’s why having a good, solid credit score (720 or above) will result in lower rates, assuming all other things are equal. However, there are some credit score limits that will have a more profound impact on your rate. Below are the most important edges:
580 – This is the minimum credit score required for an FHA loan.
620 – This is the minimum credit score required by Fannie Mae. However, most Fannie Mae loans require at least 660.
660 – This is typically the minimum for most conventional loans. Anything below this is typically considered subprime and will be harder to get financing. Although you can get loans at this credit score, you will normally pay a much higher rate.
720 – This is the historical cutoff to get the best rates. At this level you will not get any negative rate adjustments. However, in the current market, you can now get even better rates for higher scores.
760 – This is where you will now get the best rates. There may be some lenders who give additional breaks at extreme scores (800+) but for the most part, anything above 760 will give you the best rates.
Although changing your credit score isn’t as easy as deciding to increase your down payment, there are some things you can do to make sure your score is as high as possible. You can check your free annual credit report and ensure there are no inaccuracies, pay your bills on time, refrain from maxing out your available lines of credit, and use credit repair sites to remove old blemishes.