The Link between Your Credit and a Low Mortgage Rate

If you are concerned by the type of relationship that your credit score has on your ability to qualify for a low mortgage rate, you are not being paranoid. Atypically, quoting inflated rates for low credit scores is a widespread mortgage market tactic. However, in the mortgage industry the impact of a FICO score, in determining one’s credit ranking a method of assessing the risk a potential borrower presents, score and credit score are subjective issues.

While certain lenders depend more heavily on how consumer’s rates in credit scoring, other mortgage brokers do not. For the expert loan officer or lending institution, they will look beyond the computer-generated number – to find a mortgage rate they feel comfortable in extending.

But in most cases, prospective homebuyers with a “FICO” score of 630 or sub-par credit could remit an average of 8.825 percent for 30-year fixed rate mortgage (FRM). On the contrary, a buyer with a 730 credit score would qualify for a low mortgage rate of roughly 6.80 percent.

Unfortunately, the truth of the matter is that there is a direct correlation between how a mortgage consumer’s credit history may affect the actual price they will pay for a home loan. Low mortgage rates are based on the current rate quotes obtained from hundreds of thousands lenders surveyed nationwide. According to Fair, Isaac, there is a way that consumer can access rate quotes, segmented by FICO scores. The information can be sorted by each state or every zip code in the United States.

Developed by the Fair, Isaac & Company, consumers can review how their credit score will affect their ability to qualify for an ultra low mortgage rate. The free service is featured by FICO, the inventor of grading credit scores. The novelty of the tool is that it is free and it educates the homebuyer who is consumed with obtaining a low mortgage rate how lenders across the nation calculate and charge current mortgage applicants, based on their credit scores.