Bad Credit Mortgage Loans - How Does Your Fico Credit Score Affect Your Loan Approval
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Understanding the Impact of Your FICO Credit Score on Bad Credit Mortgage Loans
Overview
Wondering how your credit score influences your chances of getting a mortgage? By reviewing your credit report and FICO score, you can gain valuable insights. Here’s a breakdown of how your FICO score affects mortgage approval:
FICO Score Ranges:
- 500 - 580: Poor Credit
While securing a mortgage is possible, expect to make a down payment ranging from 5-20%. Typically, you'll need a subprime loan with a higher interest rate.
- 580 - 620: Fair Credit
You’re on the borderline. You might secure financing without a down payment, but a small amount could be required. The interest rate may vary depending on your down payment.
- 620 - 640: Average Credit
Qualifying for 100% home loan financing is likely, with no down payment required. You should benefit from a favorable interest rate.
- 640 - 700: Good Credit
You can expect approval for a 100-125% mortgage loan with a competitive interest rate.
- 700+: Excellent Credit
You have the advantage, likely qualifying for the best rates and terms available.
Factors Affecting Your FICO Score
Your FICO score is primarily influenced by your payment history and the amounts you owe. Improving your score involves making timely payments and keeping old accounts open.
Tips for Maintaining a High Score
If you’re in the process of securing a mortgage, avoid applying for new credit accounts, as this can rapidly decrease your score and impact your loan approval.
By understanding these factors, you can better navigate the process of obtaining a mortgage, regardless of your credit score.
You can find the original non-AI version of this article here: Bad Credit Mortgage Loans - How Does Your Fico Credit Score Affect Your Loan Approval .
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