Spend Money Recklessly? Does It Affect Your Credit Scores?

July 21st, 2010

credit report

Do you spend money recklessly? Does it affect your credit scores? I have written quite a bit about credit scores this year. Your credit scores are critical in getting a mortgage. Below is a summary on credit.

Minimum credit scores are currently:

FHA loans

1. 620 for an FHA Conforming loan
(which is one at $417,000 or less)

2. 660 for an FHA Jumbo loan
(which is one between $417,001-$729,750)

Conventional Conforming loans

3. *620 and up for Conventional Conforming ($417,000 or less).

*Credit score requirements for a Conventional loan vary according to down payment. Below is an example (realize these score requirements are always changing):


For a 5% down payment loan you need a 700 credit score minimum, and from 700-719 there will be an extra .50% discount points. But, if you have a 720+ credit score with a 5% down payment, there will be no discount points added on.

I mentioned a 620 was a minimum credit score on a Conventional Conforming loan, but that is only with a 20% down payment, and with an extra 3.00% in discount points!

Example 2

Another example would be if you had a 10% down payment, and between a 700-719 credit score, that would be OK, but there would be an additional 0.75% discount points.

And the credit score requirements are stricter for some loan types, such as a cash-out refinance, or for a 2 unit property.

Conventional Conforming “High Balance” loans

4. *660 and up for Conventional Conforming High Balance loans (from $417,001 to $729,750):

*Credit score requirements are higher for this class of loans. For example, if you had a 660-679 credit score, you’d need a 25% down payment and you’d be charged an additional 2% in discount points.

If you had a 720-739 score with a 20% down payment, you’d be charged an extra 0.25% discount point. But if you had a 740 score with any size down payment, you would have no additional points to pay.

Jumbo loans

5. 720 and up is preferable for Jumbo loans. Jumbo loans are also going to require higher credit scores, but requirements will vary according to each lender since these loans are not tied to Fannie Mae and Freddie Mac’s guidelines which are more universal and standardized.

Other important things to remember and check on:

Having mortgage companies pull your credit does not hurt your credit score.

Once you apply for a mortgage your credit report may be pulled again prior to settlement.

Don’t walk away from an existing mortgage if you can help it.

If you have no credit, start building a credit history right away if you want to buy a house within a year or so.

Stay tuned to this blog, there will be regular news about credit scores as things change, and they always seem to be changing in the world of credit scores! To contact me to discuss your credit, mortgage rates, or other mortgage questions, click here to schedule a call or you can email me directly.

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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