What Is An Acceptable Credit Score For Mortgages?

Even though mortgage rates these days are incredibly low, many people are missing the chance to take full advantage of it. Why? Because they don’t have an acceptable credit score for mortgages. So what kind of score do you need to get the mortgage you want?

That tiny little three-digit number means a whole lot to those who lend money. It shows them how credit worthy you are and until recently, a FICO score of 720 meant you could lock down great rates and terms for loans and mortgages.

Unfortunately, with the banks in crisis, lenders are looking for a credit score up around 740 before they are willing to offer great rates. That doesn’t mean you’re out of luck if you’re score is slightly lower. It just means your rates will be higher. Unless you have a score below 580, you should still be able to get the loan or mortgage you need.

In the United States, the average credit score is a healthy 720 according to the company that developed the FICO scale. That means 50 percent of people have a score higher than 720 and the other 50 percent score lower. The scale ranges from 300 (worst score) to 850 being the perfect score.

Having a decent credit score is important for more than just mortgages. It is used by insurance companies to determine your premiums, landlords, and some employers.

If you need to raise your credit score here are a few simple tips to remember:

Keep an eye on your credit report – errors on your report can damage your credit.

Apply for a credit card and use it wisely – pay off the balance and avoid interest charges.

Set up your accounts for automatic payment – keeps payments on time every month.

Keep your finances out of collections – this can be devastating for credit score.

Don’t use all your available credit – lenders like to see a difference between what you have access to and what you use.

Use less than 30 percent of your available credit – under 10 percent is even better!

Follow these tips for lowering your score and you can get it above 720 in no time!