How bad is having bad credit? You can get a good idea if you can pull your own credit report and get a copy of your FICO credit score. Here's a rough idea of how the FICO score works:
With a credit score between 500 and 580, which is considered "poor," you should be able to get a home mortgage loan if you are willing to put down a down payment, which will likely be between 5 and 20 percent. You will probably need a subprime mortgage loan, which has a slightly higher interest rate.
580 to 620: Good Credit: You're on the very edge. You might be able to get a loan that pays for everything, or you might need to make a small down payment. Prime interest rate may be available to you, depending on how much money you put down.
620–640 Average Credit Score: You should be able to get a home loan with no money down. You shouldn't have to pay anything up front. The interest rate on the loan should be low.
640 - 700 If you have good credit, you should be able to get a 100% to 125% home mortgage loan. You should get a good rate of interest.
If you have a credit score of 700 or higher, you're in charge. You should be able to get a good price and good terms. All of these things will be different for each borrower, depending on the size of the loan they want, their income, and other things.
What makes up the FICO Score? Most of your FICO score is based on how much you owe and how you've paid in the past. So, making payments on time and keeping old accounts open will be the fastest and best way to raise your credit score.
What should I not do if I want to keep a high score? When you're trying to get a new mortgage loan, don't apply for or open any new credit accounts. This can quickly lower your credit score and make it harder for you to get approved.
