How Your Credit Score Impacts Your Mortgage Interest Rate
The following two factors are arguably the biggest influencers on your credit score:
- On-time payments, including rent, credit cards, car loans, and other installment loans. Make your payments on or before the due date every month.
- Your balance-to-limit ratio. Try to keep your balances at 30% or less. For example, if you have a credit card with a $10,000 limit, keep your outstanding balance at $3,000 or less.
The good news is you can control these factors, and even if you slip a bit and are late on a payment, you can recover.
Your credit score is only one of the “risk” variables that influence your interest rate. When you have a higher credit score, 700+, you have demonstrated an ability and willingness to meet your financial obligations on time, and as a result you will qualify for a better interest rate than someone with a lower credit score, because you represent a lower risk of making a late mortgage payment.
It’s super-fast and easy to learn what your exact credit score is and what your mortgage interest rate would be. Here at Advantage Lending, we help buyers every day and can help you get prequalified for a mortgage at no charge! Ask me how to get started.