Minimum Credit Score Rising; Lenders Recommend Home Equity Loans
Dec 27th, 2007 @ 6:20 AM by MortgageMentor
There are still a few days left in the year, and many homeowners are rushing to borrow money against the equity they’ve built up in their houses. That’s because in 2008 the minimum credit score required for a loan, at least for Fannie Mae, is jumping up to 680. This is bad news for the 27 percent or so of consumers whose score falls below 620, the previous minimum score requirement.
Some lenders are urging homeowners to take out home equity loans, even if it is just for the purposes of creating an emergency fund. The equity in your home may be gone tomorrow, they say, and those who can borrow now should. They point to the many consumers who, had they set aside some savings, may not have lost their homes this year.
Lenders have used credit scores as a basis for making loans to consumers for years, but only in the past decade have those scores been available to consumers. Still, most home buyers do not obtain their scores, and even those who do may not understand what they mean, or the significance their credit score has on their ability to get a low-interest loan. Now, with credit score requirements tightening, getting a copy of your credit report, understanding it, and correcting errors becomes more important than ever.