If you have clients trying to secure a mortgage, chances are it is almost impossible unless they have a FICO credit score of at least 660, according to the Pittsburgh Post-Gazette
. With unemployment numbers continuing to rise, banks and lending institutions are tightening standards to prevent future mortgage defaults or late payments.
"It’s almost impossible to do an FHA [Federal Housing Administration] loan with a credit score of less than 660 right now," said Justin Rosenal, senior sales vice president at Union Savings Bank, a federally chartered lender with branches in Upper St. Clair and Richland, according to the report. Rosenal said one institutional investor informed the bank Thursday that, until further notice, it will require borrowers to have a minimum 740 FICO score for approval of any cash-out refinance mortgage applications for conventional loans.
Lenders usually use the FICO credit report to determine the borrower's ability to repay their loan, and according to the report, scores of 670 and above put them in a creditworthy position.
"A spokesperson for Bank of America confirmed that the bank has raised its FICO credit score minimum from 660 to 720 for home equity loan borrowing. JPMorgan Chase, the nation’s largest bank, now requires a credit score of 700 or higher as well as a 20% down payment for most new mortgages, according to Keosha Burns, vice president of public relations for home lending at Chase," according to the report
to read more about why lending institutions are continuing to tighten their lending standards.