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720? More like 780… or 760?

What’s the ideal FICO score for an average homeowner in a time of recession?

Whatever your score is, you’re not allowed to see it anyway. But in most cases, the thin line between an approved mortgage or not is a matter of a few points. Luke Mullins of USNews.com reports that a 720 score today is not yet enough for a good refinancing deal. He adds, “While 720 is still considered by some to be a solid FICO score, it’s not good enough to obtain the best rates in today’s refinancing market, says Chris Freemott, president of All American Mortgage in Naperville, Ill. Instead, borrowers will need a FICO score of at least 740. “FICOs are everything,” Freemott says. “[A FICO score of] 740 is the benchmark for the lowest possible rates.” Borrowers that don’t have this score can still refinance, but they’re likely to face higher rates.”

While everything in the economy is experiencing a hard landing, it doesn’t mean that you’ll have to suffer the same. Now that Fair Isaac is scheduled to implement a “fairer” scoring system in September, imagine the pressure that it can add to your current score once you get segmented in a lower section. Is 740 possible? If you’re credit history is marred with delinquent payments, it might take a longer time to achieve that grade. But as they say, take it one step at a time.

You can begin by changing your spending habits but it’s this reminder that remains the toughest to follow. Since payment history and amounts owed account for 35 percent and 30 percent respectively in the FICO computation, you might not want to trade in your past delinquencies for today’s low mortgage rates. The key is to stay within your means through self-control. Your house is more important than a flat screen TV when you already have an old set that still works. Also, resist the temptation to move around your debt. Pay it now and let go of your plans for that T-Mobile. It won’t do you any better these days. Catch up with your payments and you’ll likely clean your credit history.

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