Since a mortgage is taken when one is purchasing a house, a credit score is relevant when applying for a mortgage. Banks and other financial institutions use credit scores to assess your creditworthiness and the interest rates to charge you. Thus, is it possible to obtain a mortgage when your credit rating is 704?
What Does a 704 Credit Score Mean?
The number 704 is good when it comes to credit scores since both the FICO credit scoring system and the Vantage credit scoring system recognize it. According to the FICO score that ranges between 300-850, the scores between 670-739 are considered good. This means that you have a relatively clean credit record, but it is not impeccable.
This is true since, based on Experian data, a borrower with a 704 FICO score is considered to be in the second-best credit grade. Thus, having a 704 credit score does not necessarily mean that you will be offered the best terms; however, you will be offered competitive mortgage rates by most of the lenders.
Mortgage Rates and Credit Score: The Effect of a 704 Credit Score
The fact that the interest rate you get depends directly on your credit score is the most crucial aspect of it. Borrowers with high ratings usually benefit from lower rates.
According to the current average mortgage rates, a borrower with a credit score of 700-759 is likely to be offered a 30-year fixed rate at 5%-5. 5% based on other variables. On the other hand, a candidate with a score of 760 or above, would observe an average interest rate of around 5 percent.
It only means that a borrower with a 704 credit score may not always get the lowest possible interest rates but they can easily find majority lenders with quotes that are way below 6 percent. The only way to find out the real mortgage pricing is through pre-qualification.
Is It Possible to Use a 704 Credit Score to Get a Mortgage?
For the conventional loan, the minimum credit score is usually between 620-640. So with a credit score of 704, often referred to as good, you should not have any problem getting a mortgage provided that other parameters of your financial situation are also good.
Here are a few quick things lenders may want to verify besides your score:
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A low total debt and income ratio
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Steady income history
Down payment and the ability to secure sufficient funds to pay all closing costs.
If you meet basic qualification requirements, your credit score is good overall, and you have enough income and assets, then yes, 704 is more than enough for approval. At times, you may not be able to get the exact lowest rates that may have been advertised. However, your rate should remain one of the challenges to be solved, provided that you use optimization techniques to achieve it.
Maximizing Your Chances with a 704 Credit Score
While a 704 credit score makes you a well-qualified borrower in most cases, you can optimize your approval odds by taking these steps: While a 704 credit score makes you a well-qualified borrower in most cases, you can optimize your approval odds by taking these steps:
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Paydown balances: Elevated scores from reduced revolving utilization before the application can increase the score.
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Limit new credit: Shun new accounts which may reduce score through hard inquiries.
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Verify report accuracy: Check all your details from address to account to ensure everything is correct.
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Improve mix If needed: Recourse loans can play the role of preventing high utilization of cards when one has active installment credits.
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Choose lender wisely: determine the minimum score requirements and rates of different mortgage companies.
Get pre-qualified: Permits the lenders to assess your actual loan products at an early stage.
What Credit Score is Good Enough to Qualify for a Home Loan?
Mortgage lenders generally classify borrowers into the following credit categories: Mortgage lenders generally classify borrowers into the following credit categories:
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Excellent: 760+ — It is possible to find preferred rates with almost any lender
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Very Good: 700-759 — The most competitive rates
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Good: 670-699 — Reasonable interest rates offered by some of the lenders
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Fair or Average: 620-669 — May pay higher rates
Very Poor or Bad Credit: Below 620 — Most likely to be refused
Precisely for receiving the best rate on your home loan, it is desirable to have 760 and above. This puts you in that top excellent credit score bracket that allows you to qualify for a lender’s best rates most of the time.
Nevertheless, increasing the score in the good credit range of 670+ offers less value-added value. Preferred rates are offered to those with good credit scores, however, anything in the range of good credit will find the deals to be a mere whisker away from the average price offered to those with excellent credit.
Bottom Line, you can purchase a house with a credit score of 704, it is possible. Since it falls in the very good 700-759 credit score range, it complies with purchasing requirements for almost all mortgage companies. With other parts of your financial situation being good, it is possible to get approved for a home loan at a competitive to the average interest rate for those with a credit score of 704.
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