How credit score impacts your mortgage: Examples
So be careful not to open new credit lines, miss payments, finance big-ticket items, or do anything else that could harm your score prior to closing. And if your score has fallen into a lower tier, you might face a higher mortgage rate. Lenders routinely make a final check on your credit score in the last few days before closing. And most of us can move our scores a few points within a month or two. You’d have to move it up only a point or two to get yourself into a higher tier with a lower mortgage rate. Suppose your current score is 718 or 719. It means you might be able to secure a lower rate without improving your score all that much. The fact that lenders use credit tiers to determine rates is very important. If your score is lower than that, you’ll want to explore FHA loans (or VA loans, if you have a military service history). Start hereįannie and Freddie Mac generally don’t lend to borrowers with scores below 620.
Credit score ranges 2020 free#
While each lender is free to set its own rules, many will follow conforming loan credit tiers set by Fannie Mae. So lenders will look at the range in which your score falls and adjust your rate and fees accordingly. Mortgage rates are generally based on your credit ‘tier’ rather than your exact FICO score. Mortgage rates are based on credit score tiers So explore all your options to make sure you’re getting the lowest rate possible for your credit score. And many factors besides credit score impact your rate, too. Some loan types offer below-market mortgage rates even with moderate credit scores. If your credit score is 740 or higher - and your finances are in good shape - you should be in line for some of the lowest mortgage rates on the market.īut that’s not a hard-and-fast rule. Febru6 min read What mortgage rate will I get with my credit score?
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