Many people who are having a rough time staying current on their bills because of the economy are ruining their credit score by sending in payments in late or even not at all. Many people are struggling so bad that they have to or already filed for bankruptcy in order to save themselves any further problems. Now these same people are finding it difficult to find a loan or FHA loan. In the US three major agencies allot credit scores and FICO is on top.

What exactly is a FICO score?

FICO, Fair Isaac Corporation, is an agency that assigns credit scores to Americans. The scores range from 300-850 and they determine a persons credit appeal. What the scores determine is whether you will have a high or low interest rate on a loan. So the lower your score is the higher your interest rates will be and it will also be more difficult to find a lender that will give you credit. The opposite applies as well.

Minimum FICO credit score for home loan?

There are currently no rules in place to determine this. Different loan programs have varying minimum credit scores that they find acceptable. It comes down to the lenders whether or not you get approved for a loan.

Conventional loans = 720 or more
USDA loans = 620 or more
VA or FHA loans = 580 or more

People that have a score of 620 or above usually don’t have any problems obtaining a loan. It is a safe bet that this is the safe zone and you should really not fall below that.

Is there hope for a home loan?

Currently the government is giving out VA and FHA loans frequently because of the new Stimulus Package. The government understands that the economy is hurting peoples credit because they are having a rough time making ends meet. With the new law there are still no minimum acceptable credit score. Look into meeting with a counselor while looking for a loan, they are appointed by the HUD Department, Housing and Urban Development Department.

-M Petrone

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