Is 627 FICO score enough for mortgage?

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Having a credit score of 627 may not be the best score to have if you want to apply for a mortgage, but it is not the worse either.  627 is neither Good nor Bad; it is Fair.

Understanding your Credit score

A credit score or FICO score is what lenders would gauge if you are a borrower who could pay if you are a high-risk kind. See your credit score as a lender’s bird’s eye view of your credit history.

620-679 is deemed as Fair or Reasonable. This means that you are a moderate credit risk. Lenders may not automatically close their doors on your mortgage application but you will not be given the best possible rates.

This may seem unfair because you may think that as a person who is struggling, they should be more understanding and give you a better rate than those who can afford and have a good or excellent credit rating, right? From a lender’s point of view, they will be gambling their money on you. You will be seen as higher loan risk.

As said,  a 627  credit rating can still apply for a home mortgage and can even be approved ,albeit not with the best rates in the market. If you can wait, loan originators may tell you to improve your credit rating and get a better deal along the road.

How to improve my 627 credit rating

Part of your FICO score comes from your payment history, current debts, length of your credit history, types of credit ,and the new loans that you have. So the surefire way of improving your score is to make sure that you diligently pay your debts on time.  If you have extra money, pay off your debts as soon as possible and mind your debt-to-credit ratio.

For example, for FHA loans, before COVID-19 happened, you could get approved with a credit score of 500-580.  But now, lenders increased the minimum requirement to 640 or even higher. So with a credit score of 627, you are not too far behind.

Applying for a VA mortgage is another option. The U.S. Department of Veterans Affairs is the agency that insures all VA home loans. Credit scores are not important for them, unfortunately, private lenders who offer VA loans value them. Pre-COVID, having a score of 580-660 would be enough.  But now, things are changing. It would be best to contact us for the updated rates and minimum requirements.