The base FICO Scores range from 300 to 850, and the good credit score range is 670 to 739.
While FICO Score 8 is the most common, mortgage lenders might use FICO Score 2, 4 or 5. Auto lenders often use one of the FICO Auto Scores. And credit card lenders can use the FICO Bankcard Scores.
FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
The credit score used in mortgage applications
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO® Score 2 (Experian)
Yes, lenders do still use FICO® Score 2.
You can buy a $300,000 house with only $9,000 down when using a conventional mortgage, which is the lowest down payment permitted, unless you qualify for a zero-down-payment VA or USDA loan. Different lenders have different rules, but typically they require a 620 credit score for conventional loan approval.
About 70% of all mortgages are conventional loans, making it the most common type of mortgage. A FICO score of 620 or better is typically required for a conventional loan and, if your score is 760 or higher, you should qualify for the best interest rates.
The Minimum Credit Score Needed for an FHA Loan
To qualify for an FHA loan with a 3.5% down payment, for example, you'll need a minimum FICO credit score of 580. If your credit score is lower – between 500 and 579 – you may still be eligible for an FHA loan, but you'll need to make a higher down payment of 10%.
The primary credit scoring models are FICO® and VantageScore®, and both are equally accurate. Although both are accurate, most lenders are looking at your FICO score when you apply for a loan.
Your FICO score is a representation of your credit worthiness. FICO offers specific products and solutions for car dealers and auto loans. Their product is called Auto Score 8. As you can see here from FICO's promotional materials, Auto Score 8 is meant to help dealers, “Improve accuracy and speed of decision making.
You Have Late or Missing Payments
Your payment history is the most important factor in your FICO® Score☉ , the credit scoring model used by 90% of top lenders. It accounts for 35% of your score, and even one late or missed payment can have a negative impact. So, it's key to make sure you make all your payments on time.
The most commonly used FICO Score in the mortgage-lending industry is the FICO Score 5. According to FICO, the majority of lenders pull credit histories from all three major credit reporting agencies as they evaluate mortgage applications. Mortgage lenders may also use FICO Score 2 or FICO Score 4 in their decisions.
To afford a $400,000 house, you typically need an annual income between $100,000 to $125,000, which translates to a gross monthly income of approximately $8,333 to $10,417. However, this is a general range, and your specific circumstances will determine the exact income required.
For most mortgage types, the minimum credit score requirement is 620. This would put you in the “fair credit” range using the FICO score model. (A good credit score is 670 or higher, according to FICO.) But it's possible to qualify with a credit score below that range, depending on the type of mortgage loan.
What is the highest credit score possible? To start off: No, it's not possible to have a 900 credit score in the United States. In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U.S. have a maximum of 850.
A $150,000 30-year mortgage with a 6% interest rate comes with about an $899 monthly payment. The exact costs will depend on your loan's term and other details.
FICO® and VantageScore® are the two most popular credit scoring models today. FICO and VantageScore credit scores are equally reliable and accurate, based on the specific scoring model that's being used. Tools are available that allow you to check and monitor your credit score for free, with no impact to your credit.
On average, individuals who take out a mortgage can see their credit scores rise by anywhere from 20 to 100 points over time, provided they manage their mortgage responsibly. This increase is primarily driven by timely payments and consistent management of overall credit utilization.