Your Credit Score

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How does my credit affect my home mortgage rate?

Your Credit Score

A home mortgage rate is more than just a number--it's a veritable reward for a history of credit used wisely. The current mortgage rates that you see advertised aren't simply flat rates assured to everyone buying a home; they're usually examples of the best mortgage rates, which are made available to the best risks, or those consumers who have excellent credit.

If your credit rating is below 750, you may find that you're not offered a home mortgage rate as low as some you may have seen while shopping around. This is because your credit rating is a score that's determined by your use of credit, and the lower your credit rating is, the more financial mishaps you may have had. Maybe you've made some late payments to lenders or you've maxed out some of your credit cards. All of these behaviors make you a higher risk to lend to because they indicate some irresponsibility, even if it was the result of a minor mistake.

If you're a higher-risk borrower, lenders add additional points to your interest rate in order to compensate themselves for the additional risk you pose. This could result in you getting a home mortgage rate that's not as low as you might have liked.

   

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