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What Affect Does My FICO Score Have On My Mortgage Interest Rate?

By Eric Goodwill

Lenders use your FICO  score to determine your intentions of repaying the mortgage loan. If your credit score is above 720 you should get a very good mortgage interest rate for your mortgage depending on the term of your loan.

How Good Is Your Credit Score?

The lower your credit score the greater the risk you are to a lender. Right now lenders are not willing to take big risks so it is crucial to make sure your credit score is as high as you can get it.

Research

If your score doesn’t add up, take time to pull your credit through any three of the credit reporting agencies and make sure there aren’t any mistakes. You can dispute inaccurate information on your credit report and the vendor can make changes if they were not accurate the first time.

Get Your Debt Down

If your credit report is correct but your score isn’t where you would like it to be then now is the time to maybe payoff some of your debt if you have too much. Make sure you are making ALL of your monthly payments on time. For credit cards make sure you don’t go over 70% of your credit line and make more than the minimum monthly payments. After you payoff your credit cards don’t close the account. The more credit that you have available that you aren’t using, the better your score will look. This lets lenders know that you aren’t maxed out on your credit.   It will increase your chance on a better mortgage interest rate.

Installment Accounts

If you have an installment account that has a high monthly payment, consider paying this debt down as well. If your total monthly payments are more than 45% of your monthly income, this can also affect your mortgage interest rate. Lenders do not like to see that you’re living paycheck to paycheck.

Related posts:

1. How Does My Credit Score Affect The Mortgage Rate I Get?
2. What FICO Score Gets You The Best Mortgage Rate?
3. How Does My Credit Score Impact My Ability To Get A Mortgage Loan?
4. How Does My Credit Score Affect My Mortgage Interest Rate?
5. What Can I Do To Qualify For The Best Mortgage Rate?