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Refinance Purchase Home Equity

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Fixed ARM Interest Only FHA

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How Are Mortgage Interest Rates And Credit Scores Related?

By Eric Goodwill

Your credit score will have a significant impact on your mortgage interest rate. It can even prevent you from getting a mortgage at all. Your credit score is what the bank or lender uses to determine your credit worthiness. The lower your credit score is, the higher your interest rates will be. Lower score equates higher risk. When a credit issuing company sees risk it will automatically raise the interest rate to cover that risk.

Can I Improve My Credit Score To Get A Better Interest Rate

Before you begin to apply for a mortgage, you should always check your credit report. You will find that many credit reports contain errors. Each of these errors will have an impact on your credit score. If you dispute and correct these errors you will raise your credit score. When you raise your credit score you will receive much better mortgage interest rates. On average, it will take you a minimum of 30 days to improve your credit score enough to make a difference in the interest rate you receive. Begin reviewing your credit 1-2 months before you plan to apply for a new mortgage. This allows enough time to improve your score and receive better interest rates.

My Credit Score Has Improved – Will The Lender Drop My Interest Rate

When you have high mortgage interest rates the only thing you can do to change the rat is refinance the loan. Your lender is not going to automatically drop your interest rate because your credit score went higher. What you will need to do is refinance your mortgage at the new lower rate. However, many high risk lenders have a minimum amount of time you must keep their mortgage before you can refinance. Verify this in your contract prior to refinancing so that you are not subject to penalties by your current mortgage holder.

Related posts:

1. Are Mortgage Interest Rates And Credit Scores Related?
2. How Are Mortgage Rates And Credit Scores Related?
3. Will My Bad Credit Mortgage Rate Change If I Improve My Credit?
4. Can I Take Advantage Of Low Mortgage Interest Rates With Bad Credit?
5. Higher Credit Scores Mean Lower Mortgage Rates