According to news reports, the average national credit score hit 700 for the very first time.
Great news for those seeking a new car loan or mortgage since a higher credit score results in lower car loan and mortgage loan rates. As most of you know your credit score is a major factor in personal finances and this should continue into to the future. The better your credit history the better terms you’ll receive and you’ll also have more opportunities available to you. What’s important about this is that this is before the credit bureau’s adjusted how they evaluate civil judgments and liens. Once that happens we might see further increases in credit scores. But for now it’s great to see the average score go above 700.
Three Main Factors For Mortgage Underwriting:
Your credit score is one of three main factors in determining your mortgage rate and loan approval. The other two are your ability to repay the loan (debt to income ratio) and the value of your property compared to the amount you’re borrowing (LTV – Loan To Value ratio). Our credit pages and posts cover many different aspects credit, credit profiles and credit scores. However if you prefer to speak to someone and/or if you have any questions please be sure to contact us directly at 1-800-550-5538. We’re a top rated company with the Better Business Bureau and have many years of experience when it comes to looking at credit reports.
Important Credit Score Levels:
When it comes to refinancing a mortgage or purchasing a home there are certain credit score levels you should be aware of. Here is a list of the different credit score levels followed by an explanation of how it impacts your interest rate and the loan program you chose.
- 740 or higher – excellent credit
- 720 – 739
- 700 – 719
- 680 – 699
- 660 – 679
- 640 – 659
- 620 – 639
- 600 – 619
- 580 – 599
- 579 and below
If you have a 740 credit score or higher you are eligible to obtain the best rates a mortgage lender offers. Keep in mind that your LTV also impact the rate as well as things like cash out, subordinations and/or rental properties. When you move below a 740 credit score your interest rate and/or costs associated with the mortgage move higher.
For those with a 720 higher credit score you will probably want to lean more towards a Conventional home loan. For those between a 680 – 719 credit score you’ll probably want to consider both a Conventional loan and a FHA home loan. If you are below a 680 credit score you’ll probably want to lean towards doing a FHA loan. The reason is once you get below a 680 on a Conventional loan your interest rate really starts to move higher.
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Tips To Improve Your Credit Score:
Here are some basic tips to improve your credit score over time. And remember that if there are any significant errors on your credit report make sure you get them corrected.
- Pay your bills on time.
- Keep your credit card balances below 50% of the credit limit.
- Try not to apply for more than two to four credit cards in a two year period.
- Obtain a car loan and make sure you pay the payments on time.
- Avoid collections, charge offs and bankruptcies.
Following this simple tips will really help your credit score. The big thing with your credit score is time. So improving your score will happen over a number of years rather than just a few months. Be patient and eventually you’ll start to see your credit score increase.
Current Mortgage Rates:
If you are looking for current mortgage rates we have you covered on our current mortgage rates page. We’ll not only keep you up-to-date with where mortgage rates are at but also cover important bond market information and general economic news that may influence mortgage rates.