What's the highest credit score needed for mortgage financing?
Your credit score is important when shopping for mortgage rates, but is there a difference between a 740 FICO and the highest possible FICO of 850? I’ve literally pulled over a thousand credit reports for clients over the years and have seen the full range of scores. I’ve had some client’s who carry scores at 700+ say to me, “Oh darn, I thought my credit was better than that.” For the purposes of mortgage pricing the best possible FICO score is 740. It’s true that if your score is the best you can possibly have, an 850, you won’t get a better rate than the borrower with the 740 score. In reality for most mortgage clients a 700+ is all you need to get the best pricing unless you exceed 60% loan to value or are pulling cash out of your home. So how can you get the highest of credit scores, well there’s a lot of different information out there, but I’ve found the best resource is www.myfico.com. It has all the important info you need from the Fair Isaac Corporation (FICO). High credit balances to limits will affect the score as will numerous inquiries for different types of credit. One argument against allowing a mortgage professional to pull your credit is that too many inquiries will hurt the overall score. As a mortgage broker it’s impossible for me to quote you an accurate rate fee if I don’t know the most important factor in determining what cost, if any, there will be on your loan. Fair Isaac Corporation states that you can have your credit pulled an unlimited number of times when shopping for a mortgage within a 30 day period and it will only affect your credit as though it’s been pulled once. The important thing to remember is that the credit inquiries must be completed by a broker or bank for the purposes of obtaining a mortgage for this to remain true. The point where inquiries begin hurting your credit is when you apply for a car loan, a credit card, a gasoline card, a department store charge card, etc. in a short time period. This type of activity may be interpreted by the credit reporting bureaus as dangerous because it looks like you’re about to run up a bunch of consumer debt. These types of multiple inquiry situations can affect the score negatively. Bottom line, be smart about your credit, pay your bills on time, and don’t stress too much about things outside of your control like crazy credit score computer calculations.