If you have a loan, credit card or other forms of debt, you probably have a credit score or FICO score. If you stay on top of your bills, it will help you get an auto loan or mortgage without much trouble. But if it shows bad debt, open accounts that were sent to collection agencies, repetitive late payments, or if you simply have a limited credit history because you don’t use credit or loans, you will need to raise your credit score before you can get good interest rates, or in some cases, qualify for a loan at all.
There are different standards for credit scores, depending on what type of loan you need. Most credit models score between 300 and 850, and the higher your score, the better.
Credit Score Basics
There may be mistakes on your credit report, and you can get the mistakes fixed. Erroneous information can make getting a loan more difficult.
Credit Score Expectations for Home Loans
In order to get a conventional home loan, a credit score of 620 or above is needed. For the best interest rates, you will need a credit score of 740 or above.
There are other options, like FHA mortgage loans, which will have a higher interest rate, and cost more money in the long-run. FHA loans will typically require a credit score of 580 or above.
Credit Score Expectations for Auto Loans
Getting qualified for an auto loan is not as hard as getting a home loan. In many cases you can get a car loan with reasonable payments if your credit score is 500 or above. Again, the lower the risk to the lender, the better the interest rate will be. With a score of 700 or above, you will probably get you the best auto loan rate available.
If you need more information about getting a loan, or improving your credit score, contact Lincoln Savings Bank today.