Do you know how much of an impact your credit score has on your monthly mortgage payment? It’s more than you might think.
Consider this: A home buyer with a credit score between 760 and 850 that qualifies for a mortgage rate of 3.2 percent would pay just under $1,300 per month in principal and interest on a $300,000 loan, according to credit-scoring company Fair Isaac Corp. The same borrower, but with a credit score of under 640, could pay a rate as high as 4.8 percent, or nearly $1,570 per month.
Your credit score isn’t the only factor affecting your mortgage rate, of course. Your rate also can vary depending on how much of a down payment you make, whether you’re purchasing a primary residence or second home, and even the type and term of your mortgage. But credit scores undoubtedly are a big influence and improving your score can save you thousands, even tens of thousands of dollars over the life of your loan.
Just think about how your credit score impacts your dreams, plans and hopes for your future. It’s worth the effort to raise those numbers, as you’ll will get more favorable rates over time.
How can you improve your credit score? Check out these tips from Fair Isaac Corp.