What Credit Score Do You Need to Purchase or Refinance a Home?
Do you follow Michigan Wolverine football? Are you a college fan at all? Then you must know how well the Wolverines are playing so far this year. They have a fantastic offense that knows how to score as well as a stifling defense which keeps opponents out of the end zone for a considerable score discrepancy. So far this year, Michigan has held its Big 10 opponents to just 51 points in six games while racking up 273 of their own. No wonder they’re near the top of all polls. And speaking of scores, what kind of credit score do you need in order to qualify to purchase or refinance a home?
Credit scoring has evolved over the years and mortgage loan guidelines do typically require a minimum credit score. This score, the one issued by FICO, is a three digit number ranging from 300 to 850. Anything greater than 740 is generally considered “excellent” credit and any score below 580 is considered “poor” or “bad.” So what is the minimum score you need?
That depends upon the type of loan program your loan officer suggests for your situation, the amount of your down payment and your score. While most mortgage programs don’t require a minimum score, lenders do. For conventional loans with a credit score of say 620, you might be asked to make more down payment compared to someone with a credit score of say 750. Yet in general, most lenders ask that a credit score be at least 620 for most loan programs, either a purchase or a refinance yet individual lenders may offer more flexibility than others. For FHA loans for instance, the minimum credit score might be 600 or even 580 in certain instances. One final note- lenders use mortgage scores from the FICO Company. You, the consumer, don’t have the same access for these scores like lenders do.
Score minimums can change so make sure you don’t get too far into the process and come to the conclusion your scores are too low. Contact a loan officer for guidance instead.