Finance Wanted.

By Aubrey Clark

Working as a loan officer for the last ten years I have been asked this question quite a few times. The easy answer is 720 and above. Of coarse, a good FICO score doesn't guarantee you the best rates on a mortgage or even a car. Most of the clients that ask me this question do indeed have good credit and they know it. By asking me "what is a good FICO score" they are subliminally telling me "hey buddy I get the best rates so don't get tricky".

For the most part these customers are right; a good FICO score does usually mean the best rate. However, putting a loan together we have to look at all pieces of the pie. I have quoted borrowers with impeccable credit rates that made them want to slap me. A good FICO score opens the gate for programs that people with lower credit scores cant even consider. However other pieces of the pie can definitely bump your rate upwards.

For instance, what if you have a good FICO score but cannot prove that you have enough income to afford the loan? What if your home is over the conforming loan amount and considered a Jumbo loan? What if you are on a fixed income and living off of your retirement funds? If your home is at a high loan to value that can get you too. The bottom line, I can help a person with excellent credit into a loan like this but their rate will be 1.5% - 2% over the average rate you see posted online.

Some mortgage programs and car loans have a minimum credit score and once you reach that plateau all the rates are the same. Meaning, if I have a 640 credit score and you have a 720 credit score and we both apply for the same mortgage my rate will be the same as yours under conforming guidelines. Some car loan guidelines work the same way. The difference between the two score is you may qualify to buy the car or house without a down payment where I may have to put 5% down.

So what is a good FICO score already? Lets start at the bottom and work our way up. Credit scores run from 450 - 850 on the FICO scale. After ten years of pulling credit I have never seen either score, I have seen close though. If your credit score that begins with a "4" are probably not going to be offered credit, there are exceptions but by in large I am right. Generally 500 - 599 is considered to be poor credit, D paper, sub-prime paper, these borrowers may get the loan but they will pay dearly for it.

FICO scores between 600 - 660 are typically graded as "c paper" up to "b paper". These borrowers can expect to pay a higher price on credit cards, car loans but not necessarily when it comes to mortgages. When your FICO score reaches 680 - 720 you can usually expect to get the same rates as the person with the best FICO score. The only difference is that you will not have access to all of the programs that are available to the borrower with the higher FICO score.

If you have a credit score from 721 - 850 you will qualify for the best rates, all of the programs and probably get your bootie smooched by whoever is extending the credit. The misconception that most borrowers make is the assumption that a borrower with an 820 FICO will get preferential treatment over the borrower with a 721 score. I am afraid not, once you pass 720 your in the club, you can expect the same treatment that a person with very highest score receives you may receive a little more "bootie smooching" but that's it.

Aubrey Clark is an author and syndicated author Lendfast.com who writes extensively on Financial matters. His tutorials cover subjects like What is a good fico score, profit first negotiating to how to win when banks compete.