Credit Score

• Your credit score is a measure of how well you manage your available credit. It takes into account how much credit you have available to you, the amount of debt you currently carry, how long your credit accounts have been open and your payment history. If you have large debts, make late payments or fail to pay debts, or constantly open and close accounts, it can lower your score. Most lenders use the Fair Isaac Corporation score, or FICO score, which ranges from 300 to 850.
  
  

Mortgage Loans

• Many mortgage lenders may not have an absolute minimum credit score they require to get a loan. Other factors, such as a large down payment, could mitigate a low credit score. However, there are minimums for certain programs. For example, Fannie Mae, a government-sponsored agency that buys mortgages from banks, will only buy loans whose borrowers have a credit score of at least 620. And while the Federal Housing Administration does not require a minimum score to participate in its loan programs, it does require a score of 580 for those who want to put down a lower down payment. MyFICO.com reports that a credit score of 760 or better will qualify you for the best rate available. If your score is 620, your interest rate can be 1.5 percentage points higher.
  
  

Auto Loans

• There is no set minimum credit score to get an auto loan, but as with a mortgage, the higher your score, the better interest rate you will get. According to MyFICO, a credit score of at least 720 will get you the best interest rate on an auto loan, while a score below 620 can mean you pay three to four times the best rate. New-car dealers also require a rate of 720 or even higher to participate in low- or no-interest financing programs.
  
  

Raising Your Score

• Before you attempt to get a car loan or a mortgage, one of the first things you should do is check your credit report and score. You can get a free copy of your credit report annually from all three credit bureaus by going to annualcreditreport.com (see Resources). If you see any negative information, such as a late payment, it's likely your credit score is less than perfect. You will likely have to pay one of the credit bureaus to get your credit score, but it may be worth it if you are unsure if you have a good score or not. If your score is less than perfect, you might want to consider waiting a few months to get a mortgage or car loan, while at the same time working to boost your score by getting caught up on late accounts and paying down debt.