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What kind of loan can I get with 642 FICO
I have 642, 646 and 701 FICO scores with discharged BK from 3/06. What kind of auto loan or mortgage rate can I qualify for?
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1 Reply
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It is important to note that auto loans and mortgages vary greatly, especially regarding the interest rates one can qualify for. Some of the deciding factors are a person’s credit score, the type of loan being taken, the conditions of the market, and the loan provider, among others. But in general, FICO scores can help you have an approximate idea of your required scores, as explained below:
Car Loan: If your score is 640-699, lenders would be willing to provide a loan even if it is at a higher interest rate, changing between 6%-15%. This means that if you hold a score in the 640s or even 650s, you are more likely to be provided with mid-tier and subprime interest rates, which vary from one lender to another. If your score is 701, you are in luck since this means you have a good credit score and may now be eligible for loans at an interest rate between 4-7%.
Loan Sector: The only setback I see is that if you are looking for a mortgage loan of around 640, you may be restricted to only FHA loans, as these are specifically designed for people with poor credit. However, if your scores fall between 640-699, you may be charged anywhere from 5 to 8% and even more, depending on your employer. Let’s let your credit amount be 701, and I am sure you will be eligible for many conventional loans with as low as 4- and 6-percent interest rates.
Important Points: The most logical explanation for this is that the more money you put down to purchase a loan, the better the terms and interest rates are likely to be.
Debt-to-Income Ratio: This ratio is also used to analyze your risk because of your outstanding debts to your income. A lower ratio might give you more chances of having a better rate.
Loan Type: The rate changes the archetype of the loan you apply for an” you apply, such as fixed-rate vs. adjustable-rate loans.
Market Trends: The interest rate you get also depends on the country’s economic environment, so always check and note the current status.
Recommendations
Shop Around: Different lenders have different rates and terms on their offers, so it is wise to look for multiple options.
Improve Your Credit: Work on raising your credit score before seeking a loan because even modest increases can help you acquire better rates.
Consult a Lender: A mortgage broker or financial planner can help you receive customized assistance based on your situation.
You will have a better understanding of your options and thus may receive the preferred interest rate on a loan.