So what is the preferred credit score or the credit score cutoff in order to be able to qualify for a very good mortgage interest rate? How can I improve my credit score? How can I make sure that I qualify for the best mortgage rates? Credit scores can range anywhere from 350-850. Unfortunately there is no magic number or no cutoff point to be able to qualify for the best mortgage rates. However, having a middle credit score of 620 and above seems to give you a fair chance at qualifying for a great mortgage rate. There are some people with much higher scores than 620 that do not qualify and there are also people with much lower scores than a 620 that do qualify. Therefore, there are many other factors besides just simply credit scores that are used to determine whether you will be able to qualify for a good mortgage rate. Read throughout the rest of the page to find out the answers to the other questions listed above and many others about qualifying for mortgages, raising credit scores, etc...
Some lenders will discount the interest rate for higher credit scores, or require less documentation. While 620 is an average score to get approved for a loan, the lowest interest rates and least amount of documentation required is reserved for credit scores usually over 720.
If you have a lower credit score, you may still qualify for competitive rates if you have other factors in your favor. Having reserves, or funds available after closing, can help offset a lower credit score. If you have 4 months or more of mortgage payments reserves in a 401k, Money Market, or any other account which can be counted as liquid funds you can improve your chances of getting optimal financing terms.
Having a credit score above 720 opens up the doors to more lenders, more options, and gives you a great opportunity to obtain a very good mortgage rate. Although, having a credit score of 720 or better does still not guarantee that you will be approved for the type of mortgage that you are looking for with the best rates available. Having this score will definitely help but it does not guarantee anything. There are many other factors taken into consideration besides your credit score to qualify for a mortgage.
For jumbo loans in particular, credit scores over 700 are greatly beneficial.
There are various techniques that can be used to improve one's credit score immediately. The highest credit score available is in the mid 800's. However, aquiring a score this high is not required. Most credit scoring systems recognize 700 plu credit scores as being in the high end bracket.
After to your credit score the loan to value of the property you are trying to finance is a huge factor in mortgage approval. The chance of a property financed at 100% being declined is much higher then a property being financed at 80% of its value.
To have get a good mortgage rate you need to maintain your credit score. Make sure that you check your credit report for inaccuracies, make your payments on time and pay down your balances to have a good credit score. The better your score then the lower your mortgage interest rate provided by the lender.