Credit Scores, Interest Rates, and You

Credit scores always seem to run the show whenever it comes down to major financial decisions. And in any case, it varies greatly on the person. But have you ever wondered to what effect your credit score has on your mortgage rate? Well at your Mortgage Assistant, we’ve got a little set of guidelines to give you an idea of what goes on with your credit score and interest rate.

Note

This guide assumes that you’ve met all other requirements such as:

  • A downpayment of at least 20%
  • Additional savings
  • Income is at least three times your total payment (low debt-to-income ratio).

With that in mind, here is how your interest rate may affect your credit score:

  • Excellent (760-850) – Your credit score will have no impact on your interest rate. You will likely be offered the lowest interest rate available.
  • Very Good (700-760) – Your credit score may have little to no impact on your interest rate. You will likely be offered .1-.25% higher interest rates from the lowest available.
  • Good (660-699) – Your credit score will have a minimal to small impact on your interest rate. You will be offered .5% higher interest rates from the lowest available.
  • Moderate (620-660) – Your credit score will really begin to affect your interest rate. You will be offered 1-1.5% higher than the lowest available.
  • Poor (580-620) – Your credit score will really affect your interest rate. You will be offered 3-5% higher than the lowest available.
  • Very Poor (500-580) – Your credit score will severely affect your interest rate. You will be offered very high rates that ultimately will depend on the circumstances.

While this may not be precisely accurate, this guide should give you an idea for you to understand the link between credit scores and interest rates. In addition, having a score below moderate can make a mortgage significantly more expensive in the long run; again depending on your circumstances.

>>Do you know your credit score? Check here!<<

Check out our other articles for more information about credit scores!

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As a blog writer, Jessica gets to mix her passion for creative writing with her love for helping others. As native California resident, she shares her free time with Disneyland, outdoor adventures, and her dog.

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