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Why are lenders telling me that having a 680 credit score is not good enough for a conventional loan?!

by dawnkushla556 from Syracuse, New York. Sep 5th 2019 Reply

David R Youngs - Branch Manager & Mortgage Advisor (DavidRYoungs)
#64 ranked lender in Minnesota - 87 contributions

Great question! 680 is certainly not a bad credit score. This would be on the low side of what is generally accepted to be in the "good" credit score range. However when it specifically comes to "Conventional" loan financing, this is on the lower side of where you really want to be. Fannie Mae & Freddie Mac's each have what's called an AUS (Automated Underwriting System), which is a computer that calculates your loan file risk and is run on ALL Conventional loans prior to an underwriting review. Taking all of your risk factors into the equation, this system determines if you "Pass" or "Fail" the risk test. When you have what Fannie and Freddie consider to be a lower score, even if other areas of the file are fine, it still may not offer an approval. Another point to keep in mind is that they penalize you on the interest rate pricing/cost significantly, the lower you are in score. Typically most lenders carry the best pricing at or above 740 credit scores. 720-739 you get penalized a small amount. Next bracket is 700-719. Then in the 4th bracket down, you would have the 680-699 scores, which it sounds like is where you fall... So it may not even be worth trying to get a Conventional loan anyway. You may be better off with a government loan, such as an FHA loan, which does not penalize you NEARLY what Conventional does.I hope this helps. I'm a broker licensed to work in both Minnesota & Wisconsin, so I can only originate loans in these 2 states. However if you have further questions and would like to discuss things in more detail, feel free to call me at 651-636-2840 Ext 12 or email me at Thanks!

Sep 6th 2019
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,703 contributions

Not enough information. Generally a 680 is more than enough to get the bulk of loans. But the biggest likely issue is understanding that credit score alone does not make for a loan approval, and that certain situations will require even higher scores. Without knowing your exact situation, it is impossible for anyone here to give a great answer. I lend in MN, WI, and SD, and have an "Ask the Expert" section on my web site at - NMLS274132

Sep 8th 2019
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