Mortgage Credit Score

Mortgage credit score will have a large impact on the interest rate you are charged and thus on your monthly mortgage payments. By working to increase your credit score you should not only be approved for a new credit account but you can also save money on your monthly interest payment.

Effect on Interest Rate

Most mortgage lenders will charge you 6.15% for a $150,000 mortgage if you have an average credit score from Experian, Equifax and Trans Union of 670. This credit score is nothing to be ashamed of, but increasing your score to 700 will yield drastic results. Having a slightly higher score will allow you to borrow the same amount at a rate of 5.61%.

While this rate is only %.54 less you should notice that this rate is in effect for the full thirty years of the mortgage. Each month this could save you over $50 on the mortgage, an annual savings of over $600. Again, when you consider this will be over thirty years, wouldn't you like to save $18,000 by having a lower mortgage credit score?

Increasing Mortgage Credit Score

In order to take advantage of the savings associated with a lower interest rate you will need to take steps to improve your credit score. This can be done by paying off credit cards with large balances, closing infrequently used cards or being smarter with your money. Lenders will like to see that you make all your payments on time and do not have minimum monthly payments that take up a sizeable portion of your income.