There is a good and a bad credit score range. Fortunately, a 680 FICO Score falls under the good credit score category. Thus, it can give you a significant advantage if you want to purchase a home so that you can obtain a mortgage.
The kind of home loan you will get will absolutely depend on your personal needs and background. For instance, there is a fantastic job benefit available to service members that you might want to take advantage of. Moving to the country, where there is typically more space and you may feel safer, is another option you may be considering. Many individuals have been making a concerted effort to leave the big cities while the COVID-19 pandemic is still active. Situations like these have the power to determine what mortgage you ultimately take out more so than your credit score.
So, you’re dreaming of buying a house, and you’re wondering if your 680 credit score is good enough to make that dream a reality. The answer is: it depends.
While a 680 credit score falls within the “good” range, it’s not the most competitive one. Lenders typically seek a FICO score of 700–720, though some may consider scores as low as 680. These loans often necessitate a 10–20% down payment, incorporating home equity as a key part of the borrowing strategy.
But don’t let that depress you—you still have a ton of options available to you with a 680 credit score! Let’s examine in more detail the various mortgage programs you can be eligible for as well as the variables that affect your chances of being accepted.
Mortgage Options for a 680 Credit Score
Here are the main mortgage options available to you with a 680 credit score:
1. Conventional Loans:
- Minimum Credit Score: 620
- Down Payment: 3% (with certain programs)
- Mortgage Insurance: Required with less than 20% down, but can be canceled later
- Best For: Borrowers with a good credit score and a down payment
2. FHA Loans:
- Minimum Credit Score: 580
- Down Payment: 3.5%
- Mortgage Insurance: Required for the life of the loan
- Best For: Borrowers with a lower credit score and a limited down payment
3. USDA Loans:
- Minimum Credit Score: 640
- Down Payment: 0%
- Mortgage Insurance: Required, but at a lower cost than FHA or conventional loans
- Best For: Buyers purchasing a home in a rural area
4 VA Loans:
- Minimum Credit Score: 640
- Down Payment: 0%
- Mortgage Insurance: Not required
- Best For: Veterans and service members
Factors Influencing Your Approval Odds
While your credit score is a crucial factor, it’s not the only one lenders consider when evaluating your mortgage application. Other important factors include:
- Debt-to-income ratio (DTI): This measures how much of your monthly income goes towards debt payments. A lower DTI indicates a better ability to manage your finances.
- Employment history: Lenders want to see a stable employment history with consistent income.
- Savings and assets: Having a healthy amount of savings and assets demonstrates your financial stability and ability to make a down payment.
- Property type and location: The type of property you’re buying and its location can also impact your approval odds.
Tips for Improving Your Chances
If you’re aiming for the best possible mortgage terms here are some tips to improve your chances:
- Increase your credit score: Aim for a credit score of 700 or above. You can achieve this by paying down debt, disputing errors on your credit report, and keeping your credit utilization low.
- Save for a larger down payment: A larger down payment will reduce your loan amount and make you a more attractive borrower.
- Work on your DTI: Pay off debt or increase your income to lower your DTI.
- Get pre-approved: Getting pre-approved for a mortgage shows sellers you’re a serious buyer and can help you negotiate a better deal.
- Shop around for the best rates: Compare rates and terms from multiple lenders to find the best deal.
The Bottom Line
You stand a good chance of being approved for a mortgage if your credit score is 680 or above. However, you can raise your chances of obtaining the best terms and rates by making efforts to enhance your financial profile and credit score. Recall that purchasing a home entails a sizable financial commitment, so it’s important to take your time, do your homework, and get ready.
Additional Resources
- The Mortgage Reports: https://themortgagereports.com/
- Home Lending Pal: https://www.homelendingpal.com/
- FICO: https://www.myfico.com/
- Consumer Financial Protection Bureau: https://www.consumerfinance.gov/
Remember, this is just a general guide. It’s always best to consult with a mortgage professional to discuss your specific situation and get personalized advice.
What Your FICO Score Means
Although there are more mortgages available that you will be eligible for, you may find yourself having to choose between just two with a 680 FICO Score. This is due to the fact that mortgages with superior features and benefits are available for borrowers with higher credit scores, as well as home loans designed to assist those with bad credit in becoming homeowners. So why is this the case?.
Your FICO Score is really a portrait of the kind of borrower you have been in the past. Your credit score is a strong indicator of your responsibility and privileges, which makes you a desirable candidate for mortgage lenders. Depending on what you might ask for yourself, they might be willing to lend you more money or charge you less.
Just the same, a low credit score doesn’t speak to someone’s character. Our credit score is determined by a number of factors, many of which are beyond our control. For instance, anyone may have an accident that forces them to take out a loan they are unable to repay. In addition, some people are still saddled with student loans and other kinds of debt. Sometimes, a person’s credit score can also indicate the lack of privileges they have come from.
Ultimately, lenders are primarily concerned with how your credit score demonstrates your ability to repay the new debt. It’s a big deal, after all, because you’ll be borrowing a lot of money to purchase a house.
Later, we will discuss different types of mortgages and mention their minimum credit score requirements. You’ll see that they don’t really need very high credit scores, or even FICO scores that are comparable to yours. This is due to the fact that credit scores are only one aspect of the larger picture and will be considered alongside other factors.
The Right FICO Score
You may also want to make sure that you are using the correct FICO Score because you are applying for a mortgage. Mortgage lenders will obtain your credit report from Equifax, Experian, and TransUnion when you apply. All of these three companies can actually show different scores under your name. Mortgage lenders do not take the average of your three credit scores to determine the credit score they require for your application. They also don’t use the highest. Instead, they use the middle value of the three.
Another thing that you have to consider is if you’re buying a house with a partner. You must be aware of the FICO Score of the co-buyer of the home if someone else’s name appears on the mortgage. The mortgage lender will use the lower FICO Score between yours and this person for your application. And keep in mind that each of you will receive three credit reports in order to determine your personal accounts’ middle score.
Is 680 a Good Credit Score? What that Number Actually Means [Explained]
FAQ
Can you buy a house with a credit score of 680?
How much money can you get with a 680 credit score?
What kind of loan can I get with 680 credit score?
What kind of car loan can I get with a 680 credit score?
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Credit score range
|
Average new car APR
|
Average used car APR
|
|
Super prime (781-850)
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5.64%
|
7.66%
|
|
Prime (661-780)
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701%
|
9.73%
|
|
Nonprime (601-660)
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9.60%
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14.12%
|
|
Subprime (501-600)
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12.28%
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18.89%
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What is a good credit score to buy a house?
A favorable credit score to buy a house is typically in the high 600s and 700s. Anything higher than that is considered “exceptional”, and helps borrowers get the very best mortgage rates. Certain loan types even allow you to buy a house with a credit score as low as 500.
Is 680 a good credit score for a mortgage?
So when mortgage lenders are looking at a 680 credit score, they’ll typically see it as good enough to qualify you for a loan — but not high enough to offer lower interest rates. That means it’s extra important to shop around with a few different lenders before deciding on a mortgage loan.
Can I get a personal loan with a 680 credit score?
Yes, you should be able to get a personal loan from many lenders with a 680 credit score. Some lenders may require a higher score in the 700s, and these lenders may also give you a better interest rate.
What does a 680 credit score mean?
A 680 credit score is in the “good” range based on the most common scoring model, FICO®. With a 680 credit score, you can get approved for credit cards as well as personal, auto, and home loans. Having a low credit score not only makes it difficult to secure lines of credit and loans, but it can also cost you quite a bit of money.