‘Fair’ vs. ‘Very Good’ Credit: The Impact on Mortgages

July 15, 2019
Last updated:
April 25, 2022
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When you apply for a mortgage in WA, CO, OR, ID, and surrounding areas, your lender will want to look at a number of aspects of your financial health before they agree to provide you with a home loan.

After all, we’re talking about a lot of money, and the lender will want to make sure you’re capable of repaying the entire loan amount in full at regular intervals without missing a payment.

The way in which your lender will make this decision is to check out your credit score. This important little number can make or break your ability to secure a mortgage in the Pacific Northwest. If it’s not high enough, you could find yourself struggling to have your mortgage application approved.

The question is, what credit score do you need to get approved for a loan in Washington Colorado, Oregon, or Idaho? Further, what is your credit score impact on mortgage loan approval? Is your current score enough to get you the home loan you need to make a home purchase and seal a deal?

Let’s discuss how credit scores are assessed by lenders and what score you need to make sure your lender agrees to supply you with a mortgage.

What’s Considered Poor, Fair, Good, and Very Good Credit?

In the US, credit scores range from 300 to 850. Credit score ranges are further classified to help lenders decipher where a mortgage applicant’s credit score falls within this spectrum.

Here is a breakdown of the classifications and ranges of credit scores according to Experian:

  • 300 – 579: Very poor
  • 580 – 669: Fair
  • 670 – 739: Good
  • 740 – 799: Very good
  • 800 – 850: Exceptional

The majority of credit scores among Americans fall within the 600 to 750 range.

What Credit Score Do You Need to Get a Mortgage in WA, CO, OR, or ID?

The minimum credit score needed for a conventional mortgage in WA, CO, OR, or ID is 620. That said, some lenders might require it to be a little higher, around 640 or 650.

But many other factors come into play that influence what credit score you need to get a mortgage. While lenders themselves have their own specific criteria, several other factors on your part also play a role.

If other aspects of your financial profile are that strong, you may need to go in with a higher credit score. On the other hand, if you have a much stronger financial profile, your lender may accept something a little closer to 620.

For instance, if you have a credit score hovering around the 620 mark or even slightly below, your lender might be more open to supplying you with a mortgage if you’re able to come up with a large down payment and can prove that you have minimal debts and a sizeable bank account.

But even if you have a score of 680, for instance, you may have some trouble getting approved if your debt load is very high relative to your income and your down payment is rather small.

Regardless, a decent credit score is needed to get approved for a conventional mortgage in WA, CO, OR, or ID. If your credit score is lagging, you may need to either look for an alternative mortgage or take some time to give your credit score a boost before applying for a home loan.

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How Does a ‘Fair’ Vs ‘Very Good’ Credit Score Affect a Mortgage Application?

The higher your credit score is, the better the chances of getting approved for a mortgage. As already mentioned, a minimum score of 620 is typically required by lenders who supply conventional mortgages. As such, anything that falls within the ‘very good’ range should make it easy for a lender to approve a mortgage application.

But a ‘fair’ credit score might make it tougher to get approved, depending on where on the spectrum the credit score falls. Anything under the 620 mark will probably result in a denied application, while anything over that score will make it easier to get approved.

Why Do Credit Scores Matter When Applying For a Mortgage?

Lenders need to assess the risk factor among applicants, and one of the best ways to do that is to check out their credit scores. A decent credit score tells the lender that the applicant is responsible with their financials and spending. They’ll likely have a history of making timely payments and keeping up with their bills and debts.

A borrower with a low credit score, on the other hand, will be a riskier individual to work. A lower score usually means that the borrower isn’t as diligent about keeping up with bill payments, making them a risky borrower to deal with. The lender will assume that the lower score means the borrower will be more likely to miss payments and even default on the loan.

In the case of the latter, the lender will either charge a higher interest rate to offset their risk, or will deny the loan application altogether to avoid any potential issues in terms of missed payments and mortgage default.

That’s why it’s so important to go into a mortgage application with a good score in order to increase the chances of getting approved for a mortgage in WA, CO, OR, or ID. Having said that, it’s still possible to get approved for a mortgage even if your score is fair or worse.

Some mortgage lenders are willing to work with borrowers with subpar credit scores and will place more weight on other factors, including the borrower’s income, down payment amount, debt load, and most recent payment activity.

How Are Credit Scores Calculated?

Certain factors go into the calculation of credit scores, each with their own associated weight, including the following:

  • Payment history: 35%
  • Balances on revolving debt; 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit diversity: 10%

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Need a Mortgage?

Now that you know the credit score impact on mortgage applications, you may be ready to apply for a mortgage in Washington, Colorado, Oregon, or Idaho. If so, we’d love to help! Sammamish Mortgage has been helping homebuyers in the Pacific Northwest obtain the mortgage they need to make a home purchase since 1992, and we can do the same for you. We can offer a number of different mortgage programs. Contact us today to get the mortgage process started!

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