Credit Score of 760 Needed for Best Mortgage Rates

You can’t turn on the news today without getting a dose of harsh economic reality. One of the realities of life in the “new economy” has to do with credit scores and mortgage qualification.

Here’s the true reality of the situation. In order to qualify for the best interest rates on a home mortgage loan, you’ll probably need a credit score of 760 or higher.

Granted, your credit is only one aspect of the qualification process. Lenders will also look at your current income in comparison to your debt, and other financial factors. But your credit score is one of the top criteria needed for (A) qualifying for a mortgage loan and (B) getting the best interest rate on that loan.

Two or three years ago, you could have qualified for the best rates with a score of 650 or higher. But times have changed … in oh so many ways. As a result of the subprime mortgage meltdown and other factors, home buyers today will probably need a 760 credit score or higher to qualify for the best interest rates.

Getting a Home Below 760

It’s important to note the distinction between qualifying for a mortgage and getting a good interest rate on the loan. If your FICO credit score is between 650 and 850, and you have a favorable debt-to-income ratio, then you can probably qualify for a home loan without any problems. But you’ll have to be toward the top of that bracket if you want to qualify for the best rates the lender has to offer.

For an in-depth explanation of this subject, we turn to Brandon Cornett, creator of the Home Buying Institute. In this video, he explains what kind of credit score you’ll need to get a mortgage loan in 2009 and beyond.

Checked Your Credit Score Lately?

Where do you stand, in terms of your credit score? Do you have a 760 or higher, or do you need to improve it before qualifying for a mortgage loan? If you don’t know the answers to these questions, you should start by getting your credit scores from all three of the reporting bureaus. Yes, you actually have three different scores, and they can vary from one bureau to the next. So you need to get all three of them to see where you stand. Mortgage lenders will typically look at all three numbers.

If you find that your score is lower than the prime range we discussed above, there are plenty of things you can do to improve it. Click on the “Credit” tab in the main menu, and you’ll find plenty of helpful advice on how to do this.