What’s Your FICO Score? Do You Know What Score You Need to Buy a House?

Oh the myths we hear in our business! Recently, it was reported that 24% of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is those reporters were misinformed…as were the renters who read the erroneous articles!

To begin with, only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according to Experian:

16% Very Poor (300-579)
18% Fair (580-669)
21% Good (670-739)
25% Very Good (740-799)
20% Exceptional (800-850)

Just because you have a low credit score doesn’t mean you can’t purchase a home. Just as there are a multitude of options available for those with exceptional scores, there are a lot of options out there for consumers with low FICO® scores.

*“What’s our FICO Score? Can we buy a house?”*

Low or no credit score? There are many programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage.

The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640.

Veterans Affairs (VA) loans have no credit score requirement.

As you can see, none of those programs require a credit score above 700!

Yes, it’s true that the average FICO® score for all Closed loans in January, 2019 was 726 (that includes refinances). There are plenty of home buyers and homeowners taking advantage of the low credit score requirements when purchasing or refinancing.

This graphic represents the average FICO® Score of Closed FHA Loans since April 2012 according to Ellie Mae:

Average FICO Score of Closed FHA Loans (Refinances & Purchases)

As you can see, there has been a reduction for the last seven years. In fact, for FHA Purchase loans, the average FICO® Score reported in January 2019 was 675!

Many Americans simply assume that their credit score is too low to qualify and do not even bother to check. Credit.com confirmed that only 57% of individuals sought out their credit score at least once last year.

FICO® reported that since 2009, the average FICO score has steadily increased from a low of 686 in 2009 to today’s average of 704.This graph demonstrates the increase in the average US FICO® Score over the same period of time as the graph above (2009 – 2019).

The Average US FICO Score is on the rise in 2019.

Bottom Line

A surprising 84% of Americans have a FICO score that will allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, let’s talk! I would love to help you set a path to achieve your dream! Call or text (704) 491-3310