Bad Credit Mortgage Loan

Some of you may wonder why I picked 600 for the title of this article. Well, the facts are that the average credit score is approaching a range around 600 – 650, and we have received a majority of questions from readers who have a score in this range, asking how bad their credit score is. What I will do is provide statistics for the country and let you see where about you fall in the set of ranges provided below.

The Average score as of January 2009, was a bit higher than the 600 number, however, as the mortgage mess continues to cause Americans to both lose their homes in short sales or foreclosures, as well as not able to afford their current mortgages, and even file for bankruptcy, these averages continue to drop at a pretty staggering rate. After researching from various state records we have come up with a average credit scores for a handful states. Here is a short list:

Credit Scores in the 600′s by State Average (Numbers as of January 2009) – Bottom 4 and top 4 States Listed:
Texas – 651
Nevada – 655
Arizona – 659
New Mexico 663
Vermont – 706
North Dakota – 706
Minnesota – 707
South Dakota – 710

Now, what does each Range of credit mean for you, and how many fellow Americans share each credit range with you?

Credit Score – Rating – Percentage
Below 499 – Terrible – 3 percent
500 – 549 – Bad – 5 percent
550 – 599 – Below average/Bad – 7 percent
600 – 649 – Slightly Below Average – 12 percent
650 – 699 – Average – 15 percent
700 – 749 – Slightly Above Average – 18 percent
750 – 799 – Good – 27 percent
800 + – Outstanding Credit – 13 percent

Is a Credit score of 600 Bad?
Well, look at the chart above. It’s right on the line between “Bad” and “Below Average”. Most banks will be very cautious, especially in this day and age, lending you money. You will be able to get a mortgage if you can find a bank willing to take a risk, and if you have good income as well as a nice sum of money to place as a down payment on the mortgage. You can expect to pay a few percentage points higher then the prime rate if accepted for a mortgage, and may find it difficult to get an auto loan.

Here is a Look at Delinquency Rates for each Score range:

How Hard is it to Improve Your Score?
It would not be that difficult to increase your credit score from 600 all the way up to 700 within 18-24 months or so if you can acquire two lines of credit and not miss payment in that time span. One mistake many individuals make is that once their credit rating is damaged they often give up, and not even try for additional liens of credit. This is in fact the worse thing you can do, as in order to increase your score you must establish new debts and make your payments on time every time. With a bit of patience, as well as financial discipline anyone can can reestablish their rating and get their lives and credit back on track where it should be.