According to the "Washington Post," Fannie Mae raised its minimum credit score for conventional loans in 2009 from 580 to 620. Even if you have a 20-percent down payment, you can be rejected if your score is below 620. Fannie Mae will also reject a loan if more than 45 percent of your income goes toward paying debt.
FHA recently changed its minimum credit score to 520=580 , which qualifies you for lending programs that require only a 3.5 percent down payment.
VA loans are 100-percent financed and set aside for active and retired military, along with their families. There is no minimum credit score to qualify, though a better credit score will get you a better interest rate. Typically to get approved on A VA loan, you will need a 620 mid score with no bankruptcies or foreclosures in last 2 years with clean credit since BK or Foreclosures.
The better your score, the better your interest rate is likely to be. If your score is between 620 and 639—considered a risky score by some creditors—you could pay an interest rate of 5.718 percent on a $300,000, 30-year conventional mortgage. As of mid-August, 2010, If your score is at the high end, 760 to 850, your interest rate could be 4.129 percent on the same loan. A score of 650 may net you a rate of 5.172 percent.
USDA Home Loan Debt Ratio Waivers will be considered when the borrower has a middle credit score of 640 or higher, and the co-borrower has a credit score of at least 640.
If borrowers have credit scores of 640 or below, additional compensating factors will need to be documented for the USDA Home Loan Underwriters.
What are the minimum requirements for a FICO score?
There's really not much to it; in order for a FICO® score to be calculated, a credit report must contain these minimum requirements:
What’s in your FICO® scoreFICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.
Length of Credit History
Types of Credit Used
Do FICO scores change that much over time?In general, FICO® scores do not change that much over time. But it's important to note that your FICO score is calculated each time it's requested; either by you or a lender. And each time it's calculated it's taking into consideration the information that is on your credit report at that time. So, as the information on your credit report changes, your FICO score can also change.
How much your FICO score changes from time to time is driven by a variety of factors such as:
Small changes in your score can be important if you're looking to obtain a certain FICO score level or if you are striving to reach a certain lender's FICO score "cutoff" (the point above which a lender would accept a new application for credit, but below which, the credit application would be denied).
How long will negative information remain on my credit report?It depends on the type of negative information. Here's the basic breakdown of how long different types of negative information will remain on your credit report:
For all of these negative items, the older they are the less impact they are going to have on your FICO® score. For example, a collection that is 5 years old will hurt much less than a collection that is 5 months old.
Resources for this article are below: