There are many misconceptions about the credit score needed to buy a house. Recently, it was reported that24%of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is they are misinformed!
Only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according toExperian:
16% Very Poor (300-579)
18% Fair (580-669)
21% Good (670-739)
25% Very Good (740-799)
20% Exceptional (800-850)
Randy Hopper,Senior Vice PresidentofMortgage LendingforNavy Federal Credit Unionsaid,
“Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there for consumers with low FICO® scores,”
There are many programs available with low or no credit score requirement. TheFederal Housing Administration(FHA) now requires a minimum FICO® score of580if you want to qualify for the low down payment advantage. TheUS Department of Agriculture(USDA) does not set a minimum credit score requirement, but most lenders require a score of at least640.Veterans Affairs(VA) loans haveno credit scorerequirement.
As you can see, none of them are above 700!
It is true that the average FICO® score for all closed loans in January was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score ofclosed FHA Loanssince April 2012 according toEllie Mae:
As you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675!
One of the challenges is that Americans are unsure about their credit score. They just assume that it is too low to qualify and do not double check.Credit.comconfirmed that only57%of individuals sought out their credit score at least once last year.
“Since October 2009, the average year-over-yearFICO®Score has steadily and consistently increased, from a low of 686 in 2009 to the latest high of 704 as of 2018.”
Here is the increase in the average US FICO® Score over the same period of time as the graph earlier.
At least 84% of Americans have a score that will allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, let’s get together to help you set a path to reach your dream!
Author:Lance Whipple PA Phone: 407-494-6030 Dated: March 20th 2019 Views: 252 About Lance: Lance is a Retired Air Force Officer and skip-generation real estate agent -- his grandparents ran a...
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