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Credit Score below 620? No Loan for You!

by Steve Heideman on March 9, 2009 · 12 comments

how does behavior affect your credit score?

Well, it’s official. The last lender I had who accepted a credit score below 620 just raised their minimum credit score requirement to—you guessed it—620. While this may not be the absolute last bank in the nation to do this, it is only a matter of time before other banks and lending institutions follow suit.

The 620 minimum is for all mortgages: conforming, FHA, VA and USDA. This means that there is no longer a mortgage option for these higher credit risk borrowers (although the current market begs the question should they ever have). There are 3 scores that lenders use to determine your eligibility for a mortgage. The minimum qualifying credit score is based on the middle of these 3. For example, if you had a score of 620, 615 and 630, your mid-score, which is 620, would be the credit score that a lender would use to qualify you.

In order to make sure that you maintain a good score, here are some good tips on how to instantly improve your fico score. This knowledge can help you if you are just under the qualification limits for your new home.

(Image Courtesy of 720 Credit Guru)

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{ 10 comments… read them below or add one }

Phil low March 18, 2009 at 4:20 pm

Sometimes setting a minimum credit score is good so as not to give more risks to those below 620 to take loan which they might not be able to pay in due time. But the link provided should be considered for those below minimum score who can somehow pay.


Jay March 18, 2009 at 4:35 pm

It used to be that FHA was there to help those that might have credit issues but were able to clean up their credit for the past year or two. Now FHA only serves the mainstream it seams. There are still quality borrowers that happen to have credit scores lower than 620. It’s too bad that guidelines are so tight especially considering the tarp money that banks have been gifted.


Doc April 20, 2009 at 8:29 am

I’m one of the many folks that are being affected by the new 620 FHA requirement. I started building a home in 10/08 when the credit score required was 580. Although my DTI is 11%, no credit card dept, Strong employment background (15 years with same company),paid-off all my collection accounts about 14 months ago, current on my school and car loan now for 18 months, have $60,000 in reserves from savings and inheritance, the builder financing CO is still having trouble finding a loan simply becuase of 598, 605, 615 scores. Never new that paying-off your collection accouts actually hurts you, but I just wanted a clean slate.. Need to close in a month.. I’m now working with a company to have the paid-collections removed from my report.Any advice??? …I wish everyone in my situation best of luck!!!


Scott Lambert June 25, 2009 at 10:56 pm

June 25, 2009

The loan brokering industry has changed significantly over the past few years.
One of the main changes is on their minimum credit score requirement on FHA VA Programs.
Many wholesale lenders are requiring a 620 minimum credit score.

There’s Hope!!!
I work directly with US Bank’s Nationwide Home Mortgage division which allows me to offer a
No Minimum Credit Score requirement on our FHA/VA Programs.
Realtors, Mortgage Professionals and Consumers are all welcome to contact me.
As the industry keeps challenging us it’s good to know that there are options.
Homeownership is my community pledge to you.

Scott Lambert
E/M: [email protected]
Direct: 562-795-7544


Kevin July 27, 2009 at 6:47 am

We are still lending to ficos down to 500. We are bring back common sense UW to FHA.

Kevin DeLory
Sr. Account Executive
Mid-Island Mortgage Corp
401-333-4520 Office
401-241-2336 Cell
508-276-0625 Fax
[email protected]
Back to the basics of FHA lending. Common sense UW…NO fico score requirements.

Mid-Island MortgageCorp.
Serving the Industry Since 1959


Cynthia August 4, 2009 at 2:51 am

When borrowing money finding a low interest rate is a primary concern but without proper knowledge of the loan market finding a cheap loan can prove difficult. To make the search easier there are specially designed low rate secured loans available, which carry the desired lower rate of interest. Lenders can provide borrowers with an interest rate lower than the average when the borrower offers collateral as security.


sam harrop August 25, 2009 at 1:29 pm

i was wondering if there are any opt out sites in canada that you can stop the credit card companies from sending notices. The 720 guru mentioned something about it but i think it is just for the state. Im looking for one in canada


Simone May 27, 2010 at 9:03 am

I just purchased a home and would like to acquire a home improvement loan. How long should a person wait before applying for another loan after acquiring a home loan?


jeshudas October 11, 2010 at 8:33 am

What if I am one with zero credit? if my loan is likely to be accepted?


Max Leaman March 8, 2011 at 5:31 pm

Since this article was written, the FICO credit score requirement went up from 620 to 640 for the vast majority of lending institutions. PrimeLending received an exception from investors and can offer FHA loans to borrowers with FICO credit scores of 620 and higher. Of course, there are other requirements besides your credit score! The good news is that PrimeLending is offering this FHA option in all states except Mass.

Max Leaman
Branch Manager


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