by Chad Jordan 
Most loan programs typically require a FICO score for loan approval to be 620 or higher, but it can vary by program. Borrowers with a higher FICO score are considered less risky to lenders, which can lead to several advantages, such as a lower down payment requirement and better interest rates.
According to myFICO, a good FICO score generally falls within the 670–739 range, while a score below 620 might lead to higher borrowing costs. For example, lenders may ask homebuyers with lower FICO scores for loan approval to bring more money to the table or accept higher interest rates to offset the perceived risk.
Additionally, tools like AnnualCreditReport.com allow you to check your credit score and report for free, helping you better prepare for the home-buying process.
How Does Your FICO Score Affect Loan Approval?
Your FICO score directly influences the terms of your loan. A higher credit score could open the door to more competitive interest rates, while a lower score may narrow your options. For a detailed guide on improving your FICO score, visit the official FICO Score Education Center.
On the other hand, homebuyers with a lower FICO score for loan approval may face higher down payment demands or accept higher interest rates to compensate for the increased lender risk. Understanding how your FICO score impacts your loan options can help you better prepare for the home-buying process.
Understanding the home loan process
Factors to consider when choosing your mortgage
* Information deemed reliable, but not guaranteed
