“What rate can I get with my credit score?” is now “Can I get any rate with my credit score?”
June 21, 2009 by VideoCreditScore-Andy
Filed under Episodes
The question of “What will your interest rate be?” is now “Will you even get a loan?”
More and more evidence is surfacing that credit scoring is now becoming a go/no go decision tool. More people are facing denial of credit in this tight credit market. Here’s just a sample of how things have changed. myFICO used to publish rates for credit scores from 500 and above. Now, they are only publishing for 620 and above. That’s at least 12% of the population that’s being closed out from the data equation. I can’t say that people with 500-620 scores are being denied loans altogether, but the data doesn’t look good. LendingClub, for example, only accepts people with credit scores over 620.
These rates tell another story. People with the best credit scores are getting better deals than one year ago and people with 620 and below credit scores won’t get credit at all it seems. Prove me wrong, if you are reading this and you’ve been approved for a loan or approved someone else for a loan with a credit score under 620, I’d love to hear about it.
Just a reminder that looking at today’s weekly credit score/rate report shows you will save $109,800K with a 30 yr fixed loan of $300K. A year ago you would have saved $92,880. The math doesn’t lie. Today, you save $16,920 more over the course of the loan with the best credit than a year ago.
The big point of this is that your credit score matters more than ever. You should start tracking your FICO score to make sure you can save.
Chart from myFICO on June 21, 2009
Compare this chart with the same chart from August of 2008
I am a mortgage broker and there are lenders that are doing FHA 96.5% purchases in the very low 500’s. Granted, they are not simple, nor are they fast, but they are happening. More importantly, in my market, Virginia, I only have two lenders that are doing these loans and only one with a fair degree of reliability.
I just found your site, and like it. I do a lot of work with my clients on their credit and know that useful sites are few and far between. Good job!
Thanks Nensi. Great feedback on the loans. How many or rather what % would you say has been in the 500s as of the last few months?
Glad you like the site. As an ex-FICO exec, I felt compelled to further educate consumers in this important area. Feel free to use my videos on your site, they can be embedded quite easily.
Andy
I have 35 years of substaintial credit history- all types of loans and credit. Never ONCE did I have a late payment (more than thirty days). Recently, Chase and Sears were going to jack up the rates on their cards which i have and had a balance. I opted out, but this required that I close the accounts. I do have other loans out, including a MTG and two car loans and other cards, but I make good money (110,000K) and pay my bills.
Now my credit score is 610! Is this fair ?
Hard to tell without seeing your report, but what is your credit utilization ratio? It’s rare for someone to have a score in the low sixes if they have paid everything on time and they have a credit utilization ratio of 20% but I suppose it’s possible. Again, I’d have to see your report.
my scores are 704, 673 & 637, I’m maxed out on my three mastercard/visa credit cards (total approx 28,000) and want to pay them down to 25%. I travel 80% of the time. Approx what would be the interest rate and monthly payment? Are the payments interest only with a balloon in three years or is it amortizing? Is this for real? Also I don’t want to have any more inquiry hits on my credit reports. I applied for a couple of 0% cards to transfer the balances to reduce the rate and pay on the principal but was turned down. Obviously it showed hits on my report. When ya’ll pull a credit report is it viewed as a finance company which lowers the score more.
I’ve been self employed since 2002 and make betweem 80000 to 130000/year net.