Learn the five factors that make up your credit score and how just a few simple adjustments can improve it. Your credit score affects everything in your life. And it’s true, the better it is the better off you are.
We will take you through each of the five factors that make up your credit score and show you how a few simple tweaks can make it even better!
How your credit score affects your mortgage rate
Your credit score is among the more important factors a lender considers before deciding whether to approve you for a mortgage. But they also consider your debt-to-income ratio, your savings and how much money you have available to put toward a down payment, you can also check the 3 top tips on affording your dream home and increasing your credit score.
Beyond helping to determine whether you can even get a mortgage, your score also plays a large role in the interest rate and payment terms you’re ultimately approved for. If your credit score is below average — which experts say is anywhere from 650 to 699 — lenders may factor in risk-based pricing when quoting your mortgage details.
To offset the perceived risk of taking on a borrower with a low credit score, a lender may increase the interest rate on a mortgage. It means that a credit score of 650 might get a higher interest rate than a credit score of 720, which could cost you tens of thousands more over the life of your mortgage.