Mortgage loans difficult for consumers with credit scores below 620
09/27/2010
By Credit.com Staff
A new report reveals that 620 seems to be the magic number used by lenders to determine who is eligible for a mortgage loan and who is not. According to real estate website Zillow.com, consumers who carry a credit score of 620 or below may have more difficulties qualifying for financing.
Nearly three in 10 Americans are part of the "subprime group," or those with scores in the 620 range, Zillow told the Baltimore Sun. Although securing a loan with a lower credit score will be more difficult, it is not impossible, analysts say. Prospective homeowners would be subject to higher rates and may be required to put down a higher down payment.
The Federal Housing Administration, for example, allows consumers with credit scores of 580 to participate in the 3.5 percent down payment program. Consumers with a credit score below 580 are required to make a down payment of at least 10 percent.
A separate report reveals more lenders are looking at credit scores as the prime factor in determining whether or not to extend financing to consumers.
