GMAC Limits FICO Scores to 700+ which means…

Yes…. I know this is a blog about mortgages, but if GMAC is setting FICO limits, I’m wondering if we are going to see similar announcements this week from Countrywide or other lenders. This is why I’ve been saying that when it comes to credit, you need to make sure you are way above average. Not just you, but you and your spouse. Because if you have an 800 and she/he has a 680, and you both want to sign papers, I’ll bet you will be denied. First, you need to review what a model credit score 760 person looks like.  You can study the characteristics of an average credit score person too, although this is less important as average isn’t going to cut it anymore.  If you have an average credit score, which varies from vendor to vendor, you are going to be around a 720 and too close to the cutoff point.  

From GMAC:

GMAC Leaders and NAO Team:

In light of the disruption in the credit markets, GMAC NAO is announcing a temporary, more conservative purchase policy for retail auto contracts in the United States. In the short term, we will limit auto contracts to those consumers who have a minimum 700 credit bureau score, with an advance rate equal to or less than dealer invoice. This means that consumers will be required to make a down payment. In addition, we will restrict approval of contract terms beyond 60 months, except for those customers qualifying for GM-supported 72-month incentives currently advertised.

These are extraordinary times, and we must take these prudent steps to focus our resources on high quality retail contracts and critical areas such as dealer wholesale financing, until the credit markets are stabilized. To assist dealers, GM has enhanced its retail incentive programs in October to utilize more cash incentives. GM and GMAC will continue to work collaboratively through these challenging financial market conditions.

Barbara Stokel

Executive Vice President, North American Operations

If you are in the market for a mortgage you want to make sure you are doing everything you can to get your credit score way above this mark. Even though I consider a 760 the model score, you want to shoot for 800 so there is no doubt about your credit. A great place to start is getting educated on the credit score scale and the credit score factors.