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)Credit Score below 620? No Loan for You! by Steve Heideman