According to a report released earlier this year by the consumer credit-reporting company Experian, the average credit score among residents (and home buyers) in California was 680.
But it’s possible to qualify for a mortgage loan in California with a score below that statewide average. Some mortgage programs allow borrowers to have credit scores in the upper-500 or lower-600 range.
Average Credit Score in California: 680
In January 2018, Experian published a report entitled “State of Credit.” True to its name, this report showed the average credit score among residents in every state of the country. It also broke out the 10 states with the highest average, and the 10 with the lowest.
This report looked at the VantageScore in particular. That’s a proprietary scoring system that was jointly developed by the three consumer credit-reporting companies that operate in the U.S. — Equifax, Experian and TransUnion. There are other scoring models as well.
Among the findings: The average credit score in California was 680.
The current VantageScore model goes from 300 to 850. That’s the same numerical range used by the FICO scoring model, which is commonly used by banks and mortgage lenders in California.
- Nationwide, the average credit score was 675 (based on the VantageScore model).
- California was slightly higher than the national figure, with a score of 680.
- Minnesota had the highest average of any state in the country, with a healthy 709.
- At 647, Mississippi wound up at the bottom of the rankings.
It bears repeating: Home buyers in California can often qualify for a mortgage loan even if their credit score is below the statewide or national averages mentioned above. The figures reported by Experian might be useful for data analysis and comparison. But those numbers do not represent the minimum credit score needed to buy a house in California.
Older Americans Have Higher Scores
A related report published at the beginning of 2018 showed that older Americans tend to have higher credit scores than their younger counterparts. Maybe age brings wisdom after all.
This analysis was conducted by FICO, the company that developed the widely used FICO credit score. That scoring model also goes from 300 to 850, with a higher number being better.
According to the report, which was published on the personal finance website MONEY: “There is a 91-point difference between the average scores of those in the oldest bracket of consumers and those in the youngest group.”
What’s Needed to Qualify for a Home Loan?
Your credit score is a three-digit number derived (via computers) from the information contained within your credit reports. You might think of it as a “grade” for how well you’ve managed your debt obligations in the past.
- The good: A pattern of timely payments on car loans, credit cards, and other forms of debt tends to result in a relatively high score. This can help a person qualify for a mortgage loan, and often at a lower interest rate.
- The bad: Missed payments and delinquencies, on the other hand, tend to lower a person’s credit score. Foreclosures, bankruptcies, and debt collections can also have a negative impact. This can reduce a person’s ability to qualify for mortgage financing.
Based on the VantageScore analysis cited earlier, the average credit score among California home buyers and residents was 680 at the start of 2018. But it’s possible for borrowers seeking a mortgage loan to qualify for financing with scores below that level.
The FHA loan program requires a minimum “decision credit score” of 580, for those borrowers who want to take advantage of the 3.5% down payment. The absolute minimum score for that program is 500, as per HUD guidelines. Conventional loans often have slightly higher requirements.
The bottom line is that home buyers in California shouldn’t assume that a relatively low credit score will prevent them from getting a loan. The mortgage industry has actually “eased” over the last few years, in terms of qualification criteria for borrowers. The best way to find out where you stand is to speak with a loan officer.