One of the biggest hurdles in getting a loan approval is your credit score. Often the lender pulling (i.e. requesting and reviewing) your credit score from a major credit bureau is the first step in any lending process.
Naturally, this leads to the question…
“Is my credit score good enough?”
This is usually the major weighing question on most consumers’ minds as they apply for a new credit card, buy a car, apply for a new mortgage, or attempt to refinance their current mortgage – creating a lot of unnecessary anxiety.
Let’s see if we can relieve some of your stress.
How Low Can You Go?
Here’s a little stress relief right off the bat – it’s really, really hard to hit the bottom (i.e. 300) on this one. It’s kind of like the ACT or SAT; you get some points just for getting your name right. In fact, you are more likely to have no credit score at all, usually because you have no credit history, than to have a 300 credit score.
Relief… you’re probably not at the bottom of the barrel. Only 7 percent of the total US population is between 350 and 549. Just slightly above that mark and you are usually in the hunt for getting a loan.
Qualifying for Credit Cards
Credit cards are usually the easiest “loans” to qualify for regardless of your credit score. However, like all credit lending, the worse your credit score is, the higher your interest rate will be on your card(s).
With credit cards, you can probably get a reasonable interest rate and credit limit with a credit score above 650. Below 650 and you will need to look into a secured credit card, meaning it is “secured” by your cash – sort of like a debit card.
If you’re looking for a credit card to give you rewards or cash back, then you need to get that credit score above 700, preferably 725+.
Like credit cards, you can probably find a way to finance a car with almost any credit score. The trade off will be a higher interest rate, higher monthly payments, and potentially a hefty down payment up front.
In most cases, even with a low 500 credit score, you can come away with a manageable car loan. However, the interest rate will probably be above 10 percent and your down payment may be higher than you can afford without help from friends and family.
Wondering about the incredible deals you hear on the TV commercials? The zero down, 0 percent interest offers – those typically require a credit score above 700.
Now down to the hard stuff. Mortgage loans, because of large dollar amounts and many years of repayment risk, have much tougher credit requirements.
That being said, tough economic conditions and a stagnant housing market has created some special opportunities in affordable housing and unique FHA financing that allows even a marginal credit score to qualify.
I'm a full-time blogger and have blogged on over 10 blogs. Writing about personal finance, accounting and tax issues is my passion. Tips and advice to help you make the right decision about your cash flow problems. Compare payday lenders at getpaydayloan.us to get the right payday loan for you.
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