The Credit Score You Need to Get a Mortgage

FICO credit scores -- which tell lenders how well you've managed past financial obligations -- range from 300 to 850 points. So in the wake of the mortgage meltdown, how high does your score need to be to get approved for a home loan?

Banks and other lenders now want to see 700 credit scores and higher, which is all the more reason to strive for perfect credit. You can certainly still obtain credit and loans even if your credit scores fall below 700. But you should know that it's tougher, and you're likely to pay higher interest on any loans or credit you do receive if your credit rating isn't stellar.

Do You Have Good Credit – Or Something Else?

Here is my own completely subjective assessment of your credit, based solely on your FICO score and my personal and professional dealings with bankers and lenders of all kind:

If your FICO score is... Then your credit is:
760 – 850 Perfect
759 – 700 Good
699 – 650 Average
649 – 620 So-So
619 and below Poor

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Inside the Cave Home

This has been the winter of the Sleeper family's discontent as their 17,000-foot home, built in a cave in Missouri, was facing foreclosure. The family had to put the property up on eBay for auction -- which is, coincidentally, where they bought the property in 2003 -- and they have been publicizing their plight to try to hold onto their home.

caveland.us

BlackVoices.com

Inside the Cave Home

The Cave Party 2009 was supposed to be a fundraiser to help them save their odd home-in-a-cave from foreclosure. But now the March 27 event can just be a festive frolick, because the family has secured a loan that will help them keep the property.

Inside the Cave Home

Curt and Debra Sleeper bought the Caveland property in Festus, Missouri in 2003 on eBay. The former site of a roller rink and music venue, the family turned it into a home and meeting site, but now is facing foreclosure so the property is back up on eBay.

Inside the Cave Home

Bidding starts at $300,000 for the 17,000 square foot home, which still has a stage in a chamber for music performances. In the past, Ted Nugent, Bob Seger, Ike and Tina Turner, the MC5 and many other bands performed.

Inside the Cave Home

The Caveland property is in a wooded secluded area, but it is actually in the center of town, just blocks from shopping and dining.

Inside the Cave Home

The interior of the cave is large, and the family spent four years doing construction on the interior to carve out three bedrooms, two baths and a kitchen in the main chamber, a laundry room and meeting space in a middle chamber and maintaining the stage in the third chamber.

Inside the Cave Home

The family says that the house is energy efficient: "Geothermal and passive solar keep the home comfortable year-round without a furnace or air conditioning. In spite of the vast size of the home, our energy costs here run about the same as they did in our 800 square-foot starter home. The home naturally stays a little cooler than the average above-ground home, but we found that we acclimated quickly and easily."

Inside the Cave Home

This is the original listing on eBay that the family saw when they were looking for a property to buy.

Inside the Cave Home

The whole family chipped in on the work, including the kids.

Inside the Cave Home

The unique features of the cave allow the family to have more than one kind of running water. The family says, "The property has at least three groundwater springs, one accessible via a cistern in the middle chamber of the cave, one that yields an average of 100 gallons a day that drips into an indoor pond in the front chamber, and one near the woods that creates a shallow pond. During heavy rain, the property gets as many as fourteen beautiful waterfalls from the cliffs."

Inside the Cave Home

The Credit Crunch Has Led Banks To Demand Higher Credit Scores

Before the credit crunch, for many financial institutions, 620 was somewhat of a magic cutoff number. For example, many banks would require you to have a FICO score of at least 620 in order to get a halfway decent mortgage rate. If your score was less than 620 could you still get the loan? Yes, in most cases. But depending on the severity of your credit problems, you had to pay a lot higher interest rate and more finance charges over the life of the loan. That's true at every level of the credit spectrum.

Those in the "perfect" credit range will pay less than those with "good" credit; those with "good" credit will get better terms than people with "average" credit, and so on. In the current economic climate, having a FICO score in the 600s – even the high 680s – could mean your mortgage application gets denied.

For tips on how to improve your credit rating, visit my free financial advice blog, http://www.AskTheMoneyCoach.com.

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Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times bestseller, 'Zero Debt: The Ultimate Guide to Financial Freedom.'