Your credit score is a three-digit number that gives potential lenders an idea of your creditworthiness. The higher your score, the less risky it is for them to loan to you. When you have a less than perfect credit score, you’re likely to pay a higher interest rate than will someone with very good or exceptional credit. If you’re looking for a mortgage and you know your credit score is 660, you may be asking, “What interest rate can I get with a 660 credit score?”
Is 660 a Good Credit Score?
An individual who has a credit score of 800 or higher has exceptional credit. Scores from 740 to 799 are very good, while scores from 670 to 739 are usually considered good. The way credit scores are categorized can vary from one lender to another, but if your score is 660, most creditors would consider that to be a fair credit score.
Factors Considered in Mortgage Lending
Your credit score isn’t the only factor potential lenders consider when evaluating your mortgage application. They’ll review your credit report to look for negative items such as bankruptcy, foreclosure, repossession, or accounts that have gone into collections. You’ll be required to provide pay stubs so they can verify income. They’ll consider your work history and how much you’ve been able to save for a down payment. They’ll look at your overall debt and the ratio of your debt to your income.
Your Interest Rate
The better your credit score, the more likely you’ll get the best rate possible. Mortgage rates fluctuate based on economic conditions, so a good rate today may not be considered a good rate in several years. With a credit score of 660, your interest rate may be around 0.5% to 1% more than the lowest interest rate available. Although that doesn’t sound like a large amount, depending on the amount of money you’re borrowing, the additional interest you’re paying can add up to thousands of dollars over the course of thirty years.
Working Toward a Higher Credit Score
You may be able to get a better rate and terms if you work toward a higher credit score before applying for a mortgage or if you can save for a larger down payment. To improve your credit score, be sure to pay all your bills on time and pay down as much of your debt as you can. Avoid applying for any other new credit when you’re getting ready to apply for a mortgage.
It’s a good idea to research your credit score and what the credit bureau is reporting several months before applying for a mortgage. That gives you a chance to dispute any errors you may find and get them corrected. If there are any errors on your credit report, they may be bringing down your score.
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