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The answer to that question may depend on the specifics of your situation, but we can look at it broadly.
To begin with, we need to understand that credit scores are calculated based on a scale of 350 to 850, and higher numbers are always better. The score is formally known as the FICO score. Each of the three credit bureaus — TransUnion, Experian and Equifax — may calculate them slightly differently. Therefore, you need to look at all three credit reports to see how creditors view you.
Generally, anything over 760 qualifies you for the best interest rates on the mortgage. Scores in the 700s put you in good stead, while scores in the high 600s are still acceptable. A score below 620 is considered a poor credit risk.
So, there are three main ranges: above 760, 620-760 and below 620.
There are still variations in the 620 to 760 range. You’ll probably qualify for the credit, but there’s a penalty for a low score. For example, under one scenario, someone with a 750 would qualify for $1773 for a $300,000 mortgage, while the same mortgage would be $1988 for someone with a 630. That’s a difference of $215 per month – or over $75,000 in debt over 30 years of life.
Therefore, even in this “good to acceptable” credit range, improving your credit score can have a dramatic impact on your financial situation.
But, when your credit score is below 620, you really need to work on your credit report outlook. This is because you may not be able to secure a mortgage, and any credit you qualify for will come at a higher interest rate premium.
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