A couple of years of ago, a credit score of 680 was enough to qualify for a very good interest rate. Actually, a few years ago all you needed was a pulse. If you’re looking to apply for a loan, you should read this article entitled Loans tight even with good credit:
Now 680 is the line of demarcation for who qualifies and who qualifies for a competitive rate,” said Greg McBride, senior financial analyst for bankrate.com, a financial Web site. “The further below 680 you are, the tougher it gets to qualify. Before, if you had a pulse, you could get a loan.”
The lack of available credit has made it tougher for some consumers to get loans. And with the recent enactment of the Credit CARD Act, many in the financial world have predicted credit will become even more difficult to get.
The difference between an excellent credit score and a mediocre number could save you hundreds of dollars each month in mortgage payments or auto loans. And with a low credit score, buyers may have trouble getting a loan.
Someone financing a $200,000 home with a credit score between 760 and 850 could have a monthly payment of $1,036 on a 30-year fixed mortgage, according to Informa Research Services. But with a credit score between 620 and 639, the monthly payment rises to $1,235.
As a broker I see the tightening of credit as a serious potential problem, thus, I’m not willing to call the bottom until I know how this credit issues is going to play out.