Did you know that Credit score requirements determine whether or not you will be eligible to receive certain loans for things such as cars and mortgage? One of the main requirements when applying for loans is to have a good credit score. A good credit score can start at 670, with the goal being at around 800. What this means is that the higher your credit score is, the better rates and advantages you will receive on loans. Speaking with a credit specialist is always important to do when planning to pull out a loan. You'll know where your credit stands you can even see if there are any errors negatively impacting your credit score. Contact us HERE for a free pre-evaluation!
Credit Score for Mortgage Loans
A couple of different credit scores will help you buy a house, but it all depends on the kind of loan you will choose to buy the house with.
There are several different types of loans you can get:
- Conventional Loan- Not backed by the government. A 620 or higher credit score is recommended.
- (FHA Loan) – Ensured by the Federal Housing Administration. A 580 credit score is usually needed to qualify.
- VA Loan – For qualified veterans and spouses. There is no industry-required credit score for this type of loan.
- USDA Loan – Most industry lenders required a credit score of 640 to qualify
Credit Score for Auto Loans
Purchasing a vehicle can either be done independently with no help or can be bought by using a loan. If you do not have the cash available on the spot to purchase a car, then chances are you will need to get a loan to pay the dealership. To qualify for a good loan when buying a car, you are recommended to have a credit score of 660 at a minimum. While having this score is not necessarily a requirement, it is still best to think of it as one because it will save you a ton on interest rates for your loan.
- The higher your credit score → the lower your APR (annual percentage rate) will be on your monthly payments.
- The lower your credit score → the higher APR will be, resulting in you paying more per month.
Overall, suppose you wish to pay off your loans at the lowest rate possible. In that case, you must be able to have the recommended credit score or higher so that it works in your favor and not the other way around.
With all these loans, you can get pretty good deals on mortgage rates if you prove to lenders that you are creditworthy by showing them a credit score higher than required or recommended. Home buying is always a big deal, so make sure you are ready and happy with your credit score before making any big decisions.
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