How Does My Credit Score Affect My Mortgage Rate? - Improve Credit, LLC

How Does My Credit Score Affect My Mortgage Rate?

by Mar 3, 2021Credit Consulting

Do you know that credit scores directly impact mortgage interest rates?  A mere difference of just 100 points could cost (or save!) you thousands of dollars.  It’s been a wild ride this past year (thanks COVID-19) for the mortgage industry.  Mortgage rates saw a historic low at the start of the pandemic and have continued to stay low even as we have entered 2021.  While mortgage rates are low, the housing market has also been on the slim side.  The housing industry has predicted that the inventory of homes for sale should increase by the end of this year.

So, what does this mean for you and your credit score?  Credit-guru Wanda Strickfaden, owner of Improve Credit, and expert real estate broker, Kaila Lindsey, agree that now is the time to work on improving your credit score before locking in a low mortgage interest rate.  Strickfaden and Lindsey discussed the importance of repairing your credit score as much as possible before purchasing a home on an episode of The Improve Credit and Finance Show podcast, titled “Pros and Cons of Purchasing Real Estate During Corona” (you can watch that episode here).

Typically, a higher credit score equals lower interest rate qualifications (AKA, paying up to thousands less money over the life of your mortgage loan).  Before you even think about house-hunting, it’s smart to check your credit score and pull up your credit reports from three major credit agencies.

So, what is a GOOD credit score?

Your credit score is the most important factor lenders consider when you apply for a new mortgage. Most lenders use the FICO (Fair Isaac Corporation) model for grading credit scores.  Based on a 300-to-850-point range, the higher the credit score indicates less risk to the lender.

  • Exceptional: 800 ↑
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 579 ↓

Even if you have been preapproved for a mortgage loan, your interest rate will be through the roof if your credit score is too low.  As Lindsey states, “while you can get something (preapproval), that doesn’t always mean you should.”  If you have a low credit score, she recommends taking six months before you really need to buy to devote to improving your credit score.  Continue reading to see how Improve Credit can help you create a plan to pay you’re your debt, dispute any errors on your credit report and improve your overall credit score.

3 Ways Improve Credit Can Help

Improving your credit score and addressing any credit issues early on can help you qualify for lower mortgage rates.  By utilizing our variety of credit services, we can help you be on your way to securing a mortgage rate you’re comfortable with.

    1. Personal Credit Repair – Allow our certified credit experts to provide you with a personalized plan to turn your finances around and better plan for your financial future.
      We do the difficult work for you!  A 100-point increase to your credit score could save you thousands.  This increase directly affects your interest and principal payments – Invest in your credit score; it pays you back.
    1. Credit Monitoring – Let us help you dispute false claims/charges and safeguard you from any criminal financial behavior, such as identity theft. We customize your credit monitoring based on your specific financial needs and keep you safe from criminal behavior and its negative impacts on your credit scores.
    1. Credit Counseling – Our credit counseling program includes budgeting, finding ways to decrease your Annual Percentage Rates and managing your credit report and scores so that your overall credit improves each month. This program will help you save money and time.  Learn more about our Credit Consultation service here.

Please contact us at (704) 877-8739 and schedule a free analysis today.  We look forward to helping you improve your credit score so that you can lock in a manageable mortgage rate and live comfortably.