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Refinance Purchase Home Equity

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Are Mortgage Interest Rates And Credit Scores Related?

By Eric Goodwill

As you apply for a mortgage you will discover that mortgage interest rates and credit scores are deeply intertwined. Banks and other lending institutions will base the amount of interest you will pay largely on how good your credit score is at the time you apply. People with lower credit scores will find that they will pay higher mortgage interest rates than people with scores above 700. Even though some lenders will take into account that the economy has been a wild ride and less people have perfect credit right now, they will still see you as a risk when your score is low.

Can I Boost My Credit Score Before I Apply For A Mortgage?

It is always a good idea to boost your credit ratings before you apply for a mortgage. The better your credit score is, the better your mortgagee interest rates will be. If you know that you will be apply for a mortgage soon you should pull a copy of your credit file from each of the three major credit reporting agencies. You are entitled to one free credit report each year. When you have your report verify it for any inaccuracies and dispute any and all incorrect entries on your report. Simply cleaning up the mistakes on your report will boost your credit score. Make sure you pull all three reports because each will be different.

What If My Credit Score Rises In The Future, Will I Automatically Get A Better Mortgage Interest Rate?

There is no automatic adjustment in interest rates when your credit score changes. If your credit score improves significantly you should apply for a mortgage refinance. When you refinance you will drop your mortgage interest rates. Your original mortgage will however, remain the same until you apply for a new loan. Mortgages are contracts that can only be broken when they are paid in full.

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1. How Are Mortgage Interest Rates And Credit Scores Related?
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3. How Can I Fix My Bad Credit To Ensure I Can Get A Mortgage Loan?
4. How Does My Credit Score Impact My Ability To Get A Mortgage Loan?
5. Higher Credit Scores Mean Lower Mortgage Rates