Three of every 10 Americans don’t qualify for a home loan, according to the Zillow Mortgage Market Place Analysis. The analysis also showed that only borrowers with a credit score of at least 740 should expect to get the best mortgage rates offered due to tougher mortgage lending standards.
In doing their analysis, Zillow analyzed a total of 13 million loan quotes and over 225,000 purchase loan requests from September 2013. What was revealed was that borrowers with a credit score under 620 who requested a home mortgage for a 30-year fixed-rate loan, were unlikely to receive a loan. According to recent data from myFico.com, almost 3 of every 10 Americans (28.4 percent) have a credit score of 620 or lower, thereby putting a home mortgage out of reach for nearly one-third of Americans.
If you are thinking you are going to get the best mortgage rate that is available, you better think twice unless you have a credit score of 740 or more according to the Zillow report. Three years prior, a similar study showed that a credit score 20 points lower (720) would get you the best rate. Fortunately, according to myFico.com, 40.3 percent of Americans currently have a score of 740 or better.
How much difference does you credit score make in the mortgage interest rate?
To give you an idea of how much impact your credit score has on the mortgage rate you will be offered today, the study reveals a difference of around one-half of 1 percent (1/2%) between the best rates for a 740 plus credit score borrower and someone with a score of 620 to 739.
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