Mortgage lenders use your credit score to get an idea of the risk they may be taking if they decide to loan you money. The higher your credit score, the better your chance of being approved for a mortgage at a good interest rate. Consumers with a credit score of 620 often ask, “What mortgage interest rate can I get with a 620 credit score?”
Can I Get a Mortgage if My Credit Score is 620?
With a credit score of 620, your credit isn’t considered to be great, but you may be able to get approved for a mortgage. Credit score requirements can vary from one lender to another and can also vary based on the type of mortgage you apply for. Government-backed programs such as FHA mortgages have financial requirements that aren’t as strict as conventional mortgages. They may approve a mortgage loan to borrowers with a credit score as low as 580, but the lower your credit score, the more likely lenders may look for high income, a large down payment, or a co-borrower on your application.
Your Interest Rate with a 620 Credit Score
Your credit score can affect the interest rate you’ll have to pay on any borrowed money, including a mortgage. Borrowers with exceptional credit of 800 or above are typically approved for mortgages at the lowest interest rate being offered. As your score gets lower, your mortgage interest rate is likely to get higher. With a credit score of 620, your interest rate may be as much as 1.5% higher than the interest rate of a borrower with exceptional credit.
Another thing to keep in mind is that credit scores can fluctuate, and if your credit score drops below 620, you may fall into the subprime category. This means your interest rate could be as much as 2-4% higher than the best interest rate being offered, which can cost you thousands of dollars over the life of the loan.
Preparing to Apply
It’s a good idea to work on improving your credit score before you apply for a mortgage. Pay all your bills when they’re due, and try to pay down your credit cards to less than 30 percent of the available credit. Avoid applying for any other new credit when you’re getting ready to apply for a mortgage.
Review your credit report to make sure everything on it is accurate. Errors on credit reports are fairly common, and if one of your creditors is reporting wrong information, it could be hurting your credit score. Check that balances are right and that there are not any accounts showing late payments if you didn’t pay late. Also, make sure there are not any accounts that you don’t recognize.
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