According to a report by Experian, one of the three credit reporting companies in the U.S., the average credit score among residents in Washington State was 693, as of early 2018. But you might be able to qualify for a mortgage loan with a score well below that level.
Average Credit Score in Washington: 693
The Experian report mentioned above covered the VantageScore, in particular. This consumer credit-scoring model was jointly created by the three major reporting bureaus that operate in the U.S. (Equifax, Experian, and TransUnion).
At 709, Minnesota had the highest average VantageScore. Mississippi was at the bottom of the list, at 647. The national average was 675. That puts Washington State somewhere around the upper-middle, with a respectable 693.
Where Do These Numbers Come from?
In previous blog posts, we’ve explained the relationship between credit scores and mortgage loans. Here’s a quick recap.
These scores are three-digit numbers based on information found within a person’s credit reports. The reports themselves are essentially a record of your previous financial activity, particularly your use of credit cards and loans. The information is maintained by the three companies mentioned above — Experian, TransUnion and Equifax.
You can think of your credit score as a “grade” based on how you’ve borrowed and repaid money in the past. Consumers who have a habit of making timely payments on their debts tend to end up with higher scores than those who routinely miss payments. Similarly, consumers with a relatively low credit utilization ratio tend to score higher than those who “max out” their credit lines.
Generally speaking, a higher credit score will put you in a better position to qualify for a mortgage loan in Washington. It’s one of the factors banks and lenders use when reviewing loan applicants. A higher score might also help you qualify for a lower interest rate, which in turn could save you money over the long term.
How your credit score is determined
Qualifying for a Mortgage Loan
According to the report mentioned above, the average credit score among Washington State residents is 693 as of 2018. While this average figure might be useful for comparison purposes, it doesn’t necessarily draw the line between mortgage loan approval and denial.
In fact, it’s possible to qualify for a home loan in Washington with a credit score that is considerably lower than the average of 693.
The FHA loan program, for example, only requires a score of 580 for borrowers who wish to take advantage of the 3.5% down payment option. And the credit requirements used by Freddie Mac and Fannie Mae for conventional mortgage loans have eased over the last few years, as well.
So a home buyer with a below-average credit score shouldn’t automatically assume that a mortgage loan is out of reach. Today’s mortgage industry is actually more flexible than in previous years, with a broader range of products and programs. Additionally, there are often other “compensating factors” that can make up for a shaky credit score.
It’s also important to realize that consumers with low credit scores are not powerless. There are certain proactive steps you can take to improve your numbers. One of the most important things is to make sure that you pay all of your bills on time going forward. Your “payment history” (as its known) is the most important factor when it comes to credit-scoring models. It weighs more than any other factor.