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Understanding Mortgage Rates and Credit Scores

Jul 3, 2024

Understanding Mortgage Rates and Credit Scores

Jul 3, 2024

Understanding Mortgage Rates and Credit Scores

Jul 3, 2024

Your credit score has a significant impact on the mortgage rate you'll qualify for. Here's how:

Credit Score as an Indicator of Risk

Lenders view your credit score as a key indicator of your creditworthiness, or how likely you are to repay a loan on time and in full. A higher credit score signifies a history of responsible borrowing and managing debt, making you a less risky borrower in the eyes of lenders.

Lower Score = Higher Rate

Conversely, a lower credit score suggests a higher risk of defaulting on the loan. To compensate for this increased risk, lenders charge borrowers with lower credit scores higher interest rates. This higher rate translates to a higher monthly payment and ultimately, a more expensive mortgage over the life of the loan.

The Impact Can Be Substantial

The difference in interest rates between someone with excellent credit and someone with fair credit can be significant. Even a small difference in the interest rate can translate to tens of thousands of dollars in additional interest paid over the course of a 30-year mortgage.

Minimum Credit Score Requirements

Most lenders have minimum credit score requirements to qualify for a mortgage. These vary depending on the loan type:

  • Conventional loans: Typically require a minimum score of 620, with better rates offered for higher scores.

  • FHA loans: Government-backed loans may accept scores as low as 500 with a larger down payment.

  • VA loans: Offered to veterans and active military personnel, these loans may have lower credit score requirements or no minimum at all.

Beyond Credit Score

While credit score is a major factor, lenders consider other aspects of your financial situation when determining your mortgage rate, such as your income, debt-to-income ratio, and employment history.

Rates at LoanDesk:

We value transparency: our mortgage rates are available online without requiring personal information. A higher credit score generally leads to a more favorable interest rate on your mortgage. Focus on improving your credit score for a better financial outcome when securing a mortgage.

The Takeaway

Maintaining a good credit score is crucial for securing a favorable mortgage rate. If you're planning to buy a home in the near future, take steps to improve your credit score, such as paying bills on time, keeping credit card balances low, and minimizing new debt

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Agentdesks Incorporated DBA Radius, Radius Agent and LoanDesk is a licensed real estate and mortgage brokerage headquartered at the address, and licensed to do business, in the states set forth below.

Radius Agent - Headquarters

1160 Battery Street East #100
San Francisco CA 94111

Agentdesks Incorporated is an Equal Opportunity Employer and supports the Fair Housing Act.

CA DRE # 02051216, CO DRE # 100106082,

FL DBPR # CQ1068468, GA REC # 79559,

OR REA # 201252778, TX TREC # 9011839 ,

WA DOL # 22017298

Consumer Notice

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©2016-2023 Agentdesks Incorporated. All rights reserved.

Radius® is a registered service mark of Agentdesks Incorporated.

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Agentdesks Incorporated DBA Radius, Radius Agent and LoanDesk is a licensed real estate and mortgage brokerage headquartered at the address, and licensed to do business, in the states set forth below.

Radius Agent - Headquarters

1160 Battery Street East #100
San Francisco CA 94111

Agentdesks Incorporated is an Equal Opportunity Employer

and supports the Fair Housing Act.

CA DRE # 02051216, CO DRE # 100106082, FL DBPR # CQ1068468, GA REC # 79559, OR REA # 201252778, TX TREC # 9011839, WA DOL # 22017298; NMLS # 2262435. Agentdesks Incorporated DBA LoanDesk. CA DRE #02051216, NMLS # 2459500.

Consumer Notice

Information About Brokerage Services

Affiliated Business Arrangement Disclosure

©2016-2023 Agentdesks Incorporated. All rights reserved.

Radius® is a registered service mark of Agentdesks Incorporated.

Join our Community

Scan to download the Radius Community

App on your phone.

Available on

Agentdesks Incorporated DBA Radius, Radius Agent and LoanDesk is a licensed real estate and mortgage brokerage headquartered at the address, and licensed to do business, in the states set forth below.

Radius Agent - Headquarters

1160 Battery Street East #100
San Francisco CA 94111

Agentdesks Incorporated is an Equal Opportunity Employer and supports the Fair Housing Act.

CA DRE # 02051216, CO DRE # 100106082, FL DBPR # CQ1068468, GA REC # 79559, OR REA # 201252778, TX TREC # 9011839, WA DOL # 22017298; NMLS # 2262435.
Agentdesks Incorporated DBA LoanDesk.
CA DRE #02051216, NMLS # 2459500.

Consumer Notice

Information About Brokerage Services

Affiliated Business Arrangement Disclosure

©2016-2023 Agentdesks Incorporated. All rights reserved.

Radius® is a registered service mark of Agentdesks Incorporated.