Want to Know a Good FICO Credit Score for a Home Loan, Car, Or Personal Loan? Keep Reading!
Many people understand they need good credit in order to get the things they want or need: a home, a car, etc. But these same people may not be exactly sure what is considered a good FICO score (also known as your credit score).
If you want to know what’s a good FICO score, this guide is for you. We will not only tell you what qualifies as a good FICO score in general, we will also:
- Talk about a good FICO credit score for a home loan
- Discuss a good FICO score for buying a car
- Examine what is a good FICO score for personal loans
- Let you know how to get a good FICO credit score
By the end of this guide, you will have a better idea of what is a good FICO score for all the things you need – and how to get that good FICO score if you do not already have one.
Credit Scores 101
Before we get into specifics, like a good FICO score for buying a car or a good FICO score for a mortgage, let’s make sure we are on the same page in understanding credit scores.
Your credit score is a number credit reporting agencies will give you based upon your track record of making credit card and loan payments. Your credit score will drop each time you:
- Miss a payment
- Pay late
- Have an account in collections
- File bankruptcy
- Foreclose on a home
- Keep high credit card balances
- Close old credit cards
- Max out credit cards
- Apply for many cards or loans
The higher your score, the more “trustworthy” you look to potential lenders. This means they will be more likely to give you a loan at a great interest rate.
The most well-trusted and widely used credit score is the FICO (Fair Isaac Corporation) score.
Why a Good FICO Score Matters
So why do you even need to worry about a good FICO credit score? They actually matter quite a bit. A good FICO score can have an impact on:
- Buying a home
- Buying a car
- Getting a student loan
- Opening a credit card
- Landing a job
- Receiving lower interest rates
Now that you know getting a good FICO credit score is so important, let’s see what is a good FICO score.
So What’s a Good Fico Score in General?
If you want to know what is considered a good FICO score in general, take a look at these ranges:
- Excellent = 750 +
- Good = 700 – 749
- Fair = 650 – 699
- Poor = 550 – 649
- Bad = 550 and lower
Essentially, a 700 or above is what is considered a good FICO score. If you have this or higher, you have a good FICO score in general.
But when it comes to different activities – like needing a good FICO score for buying a car – it’s good to look at specifics.
What’s a Good FICO Credit Score for a Home Loan?
Now let’s look specifically at what you can consider a good FICO credit score for a home loan.
Image Source: Creative Commons
Determining the exact good FICO credit score for a home loan is a bit arbitrary. It really depends on the situation. Talk to your realtor, lender, and financial advisor for exacts.
However, here are some basic guidelines to keep in mind when it comes to a good FICO score for a mortgage:
- In most cases, you will need a 660 credit score to buy a house. This isn’t necessarily a good FICO credit score for a home loan with an ideal interest rate. But it is considered the spot where lenders will feel comfortable giving you a mortgage.
- Many times, a credit score of 760 or above will qualify as such a good FICO credit score for a home loan that you will receive ideal interest rates.
So you see there are really two ways to look at a good FICO credit score for a home loan: a good enough FICO score will allow you to actually take out a mortgage and a really good FICO credit score will give you the top interest rate.
As the home-buying website Zillow says, “Your credit rating may be the single most important piece of financial information you have to obtain a mortgage at the best interest rate.”
Good FICO Credit Score for a Home Loan Example
The website myFICO has a helpful tool to determine what a good FICO credit score for the home loan interest rate you want.
First, you put in your loan type. Then, you select your state. Finally, you enter your loan principal. The results will give you approximate interest rates, monthly payments, and total interest paid depending on your FICO score.
We created an example to show you the difference a good FICO credit score for a home loan can make. We searched a 30-year fixed loan of $100,000 in Arizona. These are the results:
760 – 850 FICO Score:
- APR 3.887%
- $471 monthly payment and $69,533 total interest
700 – 759 FICO Score:
- APR 4.109%
- $484 monthly payment and $74,139 total interest
680 – 699 FICO Score:
- APR 4.285%
- $495 monthly payment and $77,837 total interest
660 – 679 FICO Score:
- APR 4.499%
- $507 monthly payment and $82,395 total interest
640 – 659 FICO Score:
- APR 4.928%
- $532 monthly payment and $91,675 total interest
620 – 639 FICO Score:
- APR 5.473%
- $566 monthly payment and $103,795 total interest
As you can see, there is a big difference between a good FICO score for a mortgage and a good FICO score for a mortgage that has an excellent interest rate.
Enter your mortgage and location information on this tool to discover a good FICO credit score for a home loan in your area.
What’s a Good FICO Score for Buying a Car?
Now, let’s shift gears and examine a good FICO score for buying a car.
Just like determining a good FICO score for a mortgage can often depend on the situation, so can a good FICO score for buying a car.
MyBankTracker offers the average credit score of individuals buying new cars and used cars in 2016.
- New car average credit score: 714
- Used car average credit score: 678
To help you determine a good FICO score for buying a car, MyBankTracker also offers approximate minimum credit scores for common lenders. Here are a few to keep in mind when it comes to a good FICO score for buying a car:
- Ally Financial: 620
- Wells Fargo: 550
- Chase: 590
- Capital One: 580
- Bank of America: 600
- TD Bank: 600
Good FICO Score for Buying a Car with Great Interest
These minimum credit scores may qualify as good FICO scores for buying a car and actually acquiring a loan to do so. But that does not mean the minimum would be a good FICO score for buying a car at a great interest rate.
Image Source: Creative Commons
A helpful tool to see exactly what interest rate you can expect with your FICO score comes from Credit.com. This way, you can measure the impact of a good FICO score for buying a car.
Simply enter your credit score, your auto loan type, the loan amount, and your zip code. The results will show you what type of interest rates you can get from various lenders depending upon your good FICO credit score.
We tested a new car at $20,000 in South Carolina as an example. Here are the two lowest interest rates for new and used that we found based on each credit score category:
- Excellent FICO Score: 1.99%, 2.69%
- Good FICO Score (700-749): 2.04%, 2.69%
- Fair FICO Score (650 – 699): 3.02%, 3.19%
- Poor FICO Score (600 – 649) 3.8%, 5.79%
As you can see, having a good FICO score for buying a car can save you significant interest each month on your loan.
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What’s a Good FICO Score for a Personal Loan?
Now, let’s move on to discussing what is a good FICO score for personal loans. GoBankingRates gave a sample interest rate breakdown of a personal loan:
- 750 and above: 8.99%
- 700 – 749: 9.99%
- 660-699: 11.99%
- 620-259: 15.99%
- Under 620: 19.99%
Just like a good FICO credit score for a home loan or good FICO score for buying a car can really save you on interest payments, so can a good FICO credit score with a personal loan.
To see what a good FICO score could get you depending upon your state, the loan type, and your credit score, try NerdWallet’s personal loan tool.
How to Get a Good FICO Credit Score
Now that we have shown you what is considered a good FICO score, let’s talk about how to get a good FICO credit score.
Here are some top ways to boost your score into a good FICO score:
- Stop overspending to make sure you have enough money for all your bills each month
- Put your bills on auto pay so you never forget to make your monthly payment
- Start making extra payments on your credit cards
- Do not close old credit cards, but stop using them
- Check your credit report to see if there are any mistakes or instances of identity theft; if there are, report them so they can be removed
- Do not apply for credit more than you have to; you do not need a credit card for every store you shop at
If you do not have what is considered a good FICO score at this time, be patient. It will take some time to build, but it won’t take forever.
Conclusion – Your Good FICO Score for Buying a Car or Home
You know what is a good FICO score in general. You know what’s a good FICO credit score for a home loan. You know what’s good FICO score for buying a car or getting a personal loan, too.
Now, all you have to do is check your FICO score and see where you land.
- If you already have a good FICO score for a mortgage, auto loan, or personal loan – you are free to start the buying process.
- If you do not have a good FICO credit score for a home loan, car loan, or personal loan, try some of the tips we mention above.
Take this information on what’s a good FICO score and go into the world of credit and loans with more confidence.
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