How FICO score affects mortgage rates

There is a very insightful chart at the website regarding interest rate and credit score (I’ve linked to it below – follow the link and scroll down a bit). I bring this up because a past client recently called me to re-finance his second mortgage. When we did his loan last year his FICO was 725. Today it’s 659. The main reason for this decrease is, he just missed a payment on a credit card a month ago. The drop in credit score will mean he’ll be at a much higher loan rate in his next loan. The chart shows you how much rates can vary depending on your credit score.

How credit scores affect mortgage rates (Page 1 of 2): “Borrowers with high FICO scores — the top tier ranges between 760 and 850 — can expect lenders to offer them lower interest rates and more loan choices. Scores of 620 or lower usually place a borrower in the ‘subprime’ category, and they can expect to be quoted significantly higher interest rates and may be offered fewer varieties of loans. A FICO score of about 500-520 is generally the minimum that will qualify for a mortgage.”

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