What’s the Lowest Credit Score I Can Have and Still Get a Loan?

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One of the biggest hurdles in getting a loan approval is your credit score. Often the lender pulling (i.e. requesting and reviewing) your credit score from a major credit bureau is the first step in any lending process.

Naturally, this leads to the question…

“Is my credit score good enough?”

This is usually the major weighing question on most consumers’ minds as they apply for a new credit card, buy a car, apply for a new mortgage, or attempt to refinance their current mortgage – creating a lot of unnecessary anxiety.

Let’s see if we can relieve some of your stress.

How Low Can You Go?

Most credit scoring models range from 300 to 850.

Here’s a little stress relief right off the bat – it’s really, really hard to hit the bottom (i.e. 300) on this one. It’s kind of like the ACT or SAT; you get some points just for getting your name right. In fact, you are more likely to have no credit score at all, usually because you have no credit history, than to have a 300 credit score.

Relief… you’re probably not at the bottom of the barrel. Only 7 percent of the total US population is between 350 and 549. Just slightly above that mark and you are usually in the hunt for getting a loan.


Qualifying for Credit Cards

Credit cards are usually the easiest “loans” to qualify for regardless of your credit score. However, like all credit lending, the worse your credit score is, the higher your interest rate will be on your card(s).

With credit cards, you can probably get a reasonable interest rate and credit limit with a credit score above 650. Below 650 and you will need to look into a secured credit card, meaning it is “secured” by your cash – sort of like a debit card.

If you’re looking for a credit card to give you rewards or cash back, then you need to get that credit score above 700, preferably 725+.

Qualifying for a Car Loan

Qualifying for a car loan with a low credit score is not too difficult, but it will be more challenging than a credit card.

Like credit cards, you can probably find a way to finance a car with almost any credit score. The trade off will be a higher interest rate, higher monthly payments, and potentially a hefty down payment up front.

In most cases, even with a low 500 credit score, you can come away with a manageable car loan. However, the interest rate will probably be above 10 percent and your down payment may be higher than you can afford without help from friends and family.

Wondering about the incredible deals you hear on the TV commercials? The zero down, 0 percent interest offers – those typically require a credit score above 700.

Qualifying for a Mortgage Loan

Now down to the hard stuff. Mortgage loans, because of large dollar amounts and many years of repayment risk, have much tougher credit requirements.

That being said, tough economic conditions and a stagnant housing market has created some special opportunities in affordable housing and unique FHA financing that allows even a marginal credit score to qualify.

FHA mortgage loans are some of the most popular financing options in the current mortgage market. With credit scores as low as 580, under specific conditions and with certain restrictions, you can probably qualify for a mortgage. However, these programs are constantly changing and often have restrictions – just like credit cards and auto loans.

To get more traditional mortgage loans, your credit scores need to get above the 620 to 640 range.

If you want to get the best interest rates, you need to raise your credit score into the 740+ credit score range. Are you starting to see a pattern here?

Credit Qualifying for Loans

Hopefully, this has given you some general guidelines for how low your credit score can be and still get a loan. Keep in mind that your lender ultimately determines their credit guidelines – so, as they say, “your mileage may vary.”

Ultimately, your goal should be to continually improve your credit score by responsibly using and paying back the credit loans you qualify for and get. As a result, your future loans will be easier to qualify for and have better interest rates and terms.

What has been your experience? Did you start building your credit with a low credit score? What kinds of loans did you get first?

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  • http://ewhatsagoodcreditscore.com whats a good credit score

    Another thing to note is that not all finance companies use the same credit score system. FICO is by far the most common but if you are denied hope is not lost. You just have to shop around harder. You will probably pay more interest but if you keep on top of your payments you can build a good credit score from there and eventually get the best interest rates.

  • http://www.sallyshomemortgage.com Greg

    I can only speak for Mortgages and not to credit cards, car loans etc. The current lowest FICO score is 620, to obtain FHA financing. However, there needs to be at least 2 GOOD current accounts on the bureau. Also, the borrower needs to PROVE 12 months of current rent or mortgage payments, among other documentation that will be needed.

  • http://nexcarz.com/ NexCarZ

    For auto loans there are lenders available that do not have a minimum score requirement. In some cases you will still be able to qualify for the lower interest rates as well. Unfortunately you will have to do a little shopping around to find them.

  • Britt Cone

    The advice concerning the credit cards is erroneous at best. There are many credit cards one can get with a score under $650- UNsecured. Also, tons of credit cards with cashback/rewards are available to people with credit scores under 700.

  • CreditBouncer

    I recently received a boost in my Credit Score by paying my auto loan on time for over a year (my score when I got my car was 524). Then I got a secured credit card from Capital One while my score was a meager 540. I paid on time the first month I had my card and my credit score jumped 82pts! (No lie) was recently just approved for a Chase Credit Card with a credit line of $2200. Credit Karma says my Score is 645, Credit Sesame says my Score is 660 and Transunion says it’s 705. I really don’t know the true score but I’m thankful it has increased. I’m going to try to get it in the 800’s within the next year and a half. I don’t have a mortgage. Never have… But I would like one soon. I just want to get it at the best possible rate. Good luck to you guys!

  • Kaila Jackson
  • Chris Mallon

    FHA – VA Approved with Credit Scores as low as 580.
    • Direct Endorser of FHA and VA loans:
    FHA Loan: 3.5% down payment, plus 580 or greater credit score VA Loan : 0% down payment, plus 580 or greater credit score.
    • FHA Loan: 580-619 credit requires a debt to income ratio of 43% or less to avoid automatic downgrade to manual underwrite, 620+ FICO up to 55% DTI with an Automated Approval.
    • VA Loan: 100% financing up to a 46% DTI on a manual underwrite. [If compensating factors needed, see list below].
    • 3 Open Trade Lines with 12+ months recent activity & positive payment history.
    • Alternative trade lines accepted: utilities, car/renter’s insurance, cable, phone, etc….
    • Loan Processing and Underwriting all under one roof.
    • 15- 21 day Turn times from Contract date to Fund Date.
    • Same Day Credit Analysis and Conditional Loan Approvals—7 days a week.

    Compensating Factors [When Necessary on a Manual Underwrite].
    One or more of the following:
    • 1-3 months of reserves (PITI).
    • Job stability (2+ Years with Current Employer).
    • A potential of a substantial increase in earnings due to job training or education.
    • Current rent is comparable to or more than proposed mortgage payment (Minimal payment shock).

    Chris Mallon
    Loan Officer
    1300 West Walnut Hill Lane, Suite 257 Irving TX 75038.
    Irving Office Direct: 214-281-8623 Cell: 817-874-0465 Fax: 888-377-8031.
    Email: chris.mallon@nlc-loans.com.
    Company NMLS # 32416-Branch NMLS #1219148.