What is a good credit score for a mortgage application?
July 11, 2008This is a question I get quite often. With tightening credit standards in the atmosphere, it is important to know what number you should aspire for. Many lenders use the credit score to determine whether you qualify for a mortgage, how much you could qualify to purchase and how much down payment you will need to place towards a home.
In my professional opinion, I would say that if your score is over 720, you have nothing to worry about. You should qualify for almost any type of mortgage with this score. For a zero down mortgage (which is about disappear with the new government regulations), the minimum credit score requirement is 680.
A score of 720 score is really not that hard to achieve. This would put you in the upper 60% of the population. At this level, your credit bureau will probably show that you meet all your debt obligations on time and you’re not maxing out on your credit cards.
The new government rules that is set to take effect on Oct 2008 will require a minimum credit score of at least 620 to obtain a mortgage with 5% down payment. At a score of 620, the lender will want to understand why your score is low. If the lower score is due to repeated delinquencies or collection items, then your application could still be denied. However, if the reason is because of say, high balances on your credit cards, then some lenders may find this acceptable.
A lower credit score can costs thousands of dollars in extra interest costs or missed opportunities. So, if you are planning take out a mortgage or refinance your home, you would be well advised to make sure that your credit score is as high as it can be. If you are unsure as to how to increase your credit score, I strongly recommend that you consult a mortgage broker. I am always happy to educate anyone who would like to learn more about how your score is arrived at and help you develop a strategy to raise your credit score.
Posted by vancouvermortgage