Potential homeowners denied mortgage loans due to falling credit scores
By Credit.com Staff
Low mortgage and inflation rates have encouraged many families to purchase their first home, but some are finding they do not qualify. The recession forced a large number of Americans into mortgage and credit card debt, causing their credit scores to drop significantly.
As a result of tightened lending and underwriting criteria, individuals who would have been considered creditworthy in 2007 are falling below the required credit score standards.
"Below [a credit score of] 620 there are not a lot of places people can go," Kevin Retcher, First Meridian Mortgage Corp. owner told the Washington Examiner. "[For] anything below 740 there are pricing implications. We fundamentally have just gone back to the way it was [before the housing boom]."
Credit scores may not be the only factor holding would-be homeowners back. More mortgage guarantors are requiring proof of income, as well as tax documents, investment and asset information and two copies of a consumer's credit report. Some analysts say high foreclosure rates coupled with tightened restrictions may hinder the recovery of the real estate market.