Question
How do Credit Scores affect Mortgage Rates?
Answer
Typically, a higher Credit Score implies better credit worthiness (which can positively influence your eligibility for a loan, and can possibly reduce your borrowing costs). One such widely used Credit Score is known as the FICO Score. It was develop by the first company to develop a Credit Score: Fair Isaac Corp. Such score is a number on a scale between 300 and 850.
According to Myfico, the effect of your Fico Score on your 30-Year Fixed Mortgage Borrowing Rate would be as in the table below for February 2, 2007. Such table is shown merely to underline the effect of Fico Scores on your Mortgage Rate. Obviously, as the general mortgage rate environment changes, so do these rates, and the difference between them.
For the given table, it is worthy to note that a Fico Score below 580 resulted in a 30-Year Mortgage Borrowing Rate more than 3.3% higher than a Fico Score above 760.
Fico Score |
30-Yr Mortgage Rate
APR |
Monthly Payment |
| 760-850 |
5.961% |
$1,791 |
| 700-759 |
6.183% |
$1,834 |
| 660-699 |
6.467% |
$1,890 |
| 620-659 |
7.277% |
$2,052 |
| 580-619 |
8.401% |
$2,286 |
| 500-579 |
9.296% |
$2,478 |
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