Mortgage Rates Drop, But Credit Bar Rises?
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
October 25th, 2010
According to a recent article in Smart Money, the minimum credit score to get the best rates and terms on a mortgage just increased by 40 points. A FICO score of 680 use to be the break-point between great credit and good credit. Now the line has been upped to 720, according to Smart Money author AnnaMaria Androitis.
If this is true, the Redding/Shasta County real estate market could be adversely impacted. Local loan brokers and loan officers have told me in the past the average credit score in this part of California hovers in the low 600’s. The higher the credit score bar is raised for a borrower to obtain the best loan terms, the fewer prospective buyers able to take advantage of historic-low interest rates.
AnnaMaria points out that a 680 credit score used to be something to be proud of. Such a score implied you paid your bills on time, perhaps getting dinged on a refi, but all and all qualified for the best interest rates. The change has now put this score solidly in the second-tier, potentially costing a borrower thousands over the life of a typical mortgage loan.
Other factors that impact credit scores:
- Length of credit history-15 years or more is tops
- Low credit card balances-in relation to total available credit
- Applying for new credit cards
For those near the break-point, a credit inquiry can push you down a tier. Increasing your credit balances above 30% of your total available credit could also send your score downward.
To maintain or increase your credit score, pay bills on time, pay your balances down and avoid applying for new lines of credit.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
