Is a 690 Credit Score Good Enough to Buy a House?

When it comes to purchasing a house, your credit score plays a crucial role in determining your eligibility and the terms of your mortgage. A credit score of 690 is considered to be in the "good" range, but whether it is sufficient depends on several factors. This article will explore what a credit score of 690 means, how it affects your mortgage application, and additional steps you might take to improve your chances of securing a favorable loan.

Understanding Credit Scores

Credit scores typically range from 300 to 850. They are categorized as follows:

• Excellent (750 - 850)
• Good (700 - 749)
• Fair (650 - 699)
• Poor (600 - 649)
• Very Poor (300 - 599)

A score of 690 falls into the "Fair" category. This means you have a decent credit history but may not be seen as a low-risk borrower by all lenders.

Impact on Mortgage Applications

1. Interest Rates: Lenders use your credit score to gauge the risk of lending you money. A higher score usually translates to lower interest rates because you are deemed less risky. With a score of 690, you might not qualify for the lowest rates available, but you should still be able to secure a mortgage with reasonable terms.

2. Loan Approval: A score of 690 generally allows you to qualify for a mortgage, though it’s on the borderline between "Good" and "Fair." This means you could be approved for a loan, but the terms may not be as favorable as they would be for someone with a higher credit score.

3. Down Payment Requirements: Some lenders may require a higher down payment from borrowers with lower credit scores. While a score of 690 might not necessarily lead to a higher down payment requirement, it is something to consider.

4. Loan Types: Various loan types have different credit score requirements. For instance, conventional loans usually require a higher credit score compared to FHA loans. With a score of 690, you may find FHA loans more accessible, though conventional loans are still an option.

Improving Your Chances

If you aim to enhance your chances of getting a better mortgage rate or more favorable terms, consider these steps:

1. Pay Down Debt: Reducing your credit card balances and other debts can improve your credit score over time. Lower debt levels generally lead to better credit scores.

2. Increase Your Credit Limit: If you have credit cards, request a credit limit increase. This can help lower your credit utilization ratio, which can positively affect your credit score.

3. Avoid New Credit Accounts: Each new credit application can result in a hard inquiry on your credit report, which might temporarily lower your credit score. Avoid applying for new credit accounts before applying for a mortgage.

4. Check Your Credit Report: Ensure there are no errors on your credit report that could be negatively impacting your score. Correcting inaccuracies can potentially boost your credit score.

Comparison Table of Loan Options

To provide a clearer view, here’s a table comparing the typical requirements and benefits of various mortgage types based on credit scores:

Loan Type	Minimum Credit Score	Typical Interest Rate	Down Payment Requirement
Conventional Loan	620	3.5% - 4.5%	5% - 20%
FHA Loan	580	3.0% - 4.0%	3.5%
VA Loan	620	2.5% - 3.5%	0%
USDA Loan	640	2.8% - 3.8%	0%

Conclusion

In summary, a credit score of 690 is generally considered adequate for buying a house, though it is on the lower end of the "Good" range. This score provides you with access to many mortgage options, but it might not always result in the most favorable terms. By taking steps to improve your credit score and understanding your mortgage options, you can enhance your chances of securing a better deal.