inIs 620 a good credit score? If it is that you have a 620 credit score then you are considered to be a subprime consumer as well as others with very similar credit scores. But you however should know that it will not prevent you necessarily from borrowing money.
Is 620 A Good Credit Score
In the United States, the average FICO credit score as of 2021 is 714, and scores that are within the range of 580-669 are considered to be fair credit. In this post, we will be looking at what your credit score of 620 means and just how you are likely to qualify for specific types of loans, and also what you can do to improve your credit score.
Just as mentioned already, credit scores that are within the 580-669 range are considered to be fair credit. And while your credit score is just below the average mark, it is not in the realm of “bad credit” and it should not necessarily halt you from getting certain types of loans.
With your credit score of 620, lenders generally will consider you to be a higher-risk borrower. This simply means that to get approval for a loan, you are very much likely to need strong qualifications when it comes to income, employment, as well as other debts. And you are also likely to get relatively high-interest rates on loans when compared to other borrowers with excellent credit scores.
Can I Get an Auto Loan with a 620 Credit Score
The short answer to the question above is yes, but you are very much likely to get a significantly higher-than-average interest rate. And to put it into a much better perspective, as of the month of November 2022, the typical borrower with prime credit (which is 720 or higher FICO score) reportedly got an APR of 5.34% on a 60-month new auto loan. That being said, with a score in the 620-659 credit score range, the average APR was 11.76%. And with a score of 590-619 on the other hand, the average rate was 15.92%.
You should also know that it is also worth mentioning that interest rates can vary among lenders significantly, even for borrowers with the exact same credit score. And this here is especially true for borrowers in the subprime credit tiers (which is below-average credit scores).
So, if it is that you are purchasing a home or car, it is very important to shop around for the best loan terms. In fact, you should know that the FICO model is designed to encourage rate shopping. Any credit inquiries for the very same type of loan in a short period of time (which is usually two weeks) will count as a single inquiry for scoring purposes. Therefore, it really does not hurt your credit score to apply at multiple lenders or lending platforms, especially for those like Upstart that consider far more than just the credit scores of applicants.
Can I Get a Mortgage with a Credit Score Of 620
The answer to the question is a resounding yes! Your 620 credit score can easily and effectively qualify you for a mortgage. And you also have a couple of main options.
With a credit score of 580 or even higher, then you can qualify for an FHA loan to purchase a home with a down payment of just 3.5%. These loans in question are guaranteed by the Federal Housing Administration and however have their downsides (such as mandatory FHA mortgage insurance in question), but they can also be a great option for those persons who want to become homeowners.
And in order to get a conventional mortgage, the minimum credit score requirement in question is 620 per Fannie Mae’s lending standards. However, you should know that a credit score that is on the lower end of the spectrum comes with certain caveats. For instance, to get a conventional loan with a 620, you will get to need a maximum debt-to-income ratio of 36% and should also be prepared to make a 25% down payment. You then can get a conventional loan with 5% down (or even 3% in many cases), but the minimum credit score that is required for this is 660 as per the latest Fannie Mae underwriting standards.
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