How Does Your Credit Score Affect Your Mortgage Refinance

Your credit score is the main indicator to lenders that you can pay back the loan, in-full, and on-time.  It’s a measure of fiscal health.  How does your credit score affect your mortgage refinance?  It means everything.

Credit scores range anywhere from 300 to 850, with 300 being very poor and 850 is perfect.  The score is determined by:

  • Checking your past payment history (35 percent)
  • How much you owe (30 percent)
  • The length of time you have had credit (15 percent)
  • Any new credit (10 percent)
  • What type of credit you have (10 percent)

The majority of your credit score is your past payments and total debt, so the better those look the better off you will be.  If you have missed payments or lots of high-interest debt, you will fall into the “high-risk” category to lenders and will have trouble securing a loan or getting the rate that you want.

Since a lender is taking on more risk that the loan will not be repaid, they will charge a higher rate to take on that risk.  Someone with an 800 credit score might get a 2% interest rate, while someone under 650 may end up a point or more higher.  It’s a scale that helps determine who can get a loan.  Bad credit can cost you thousands of dollars over the life of your loan.

Bad credit isn’t the end of the line, though.  There are lots of ways to raise your credit score, and with some hard work, you can get there.  Just follow good practices and you can raise your credit score.  We also wrote up a handy guide you can use to help.  Whether you are doing a Cash Out Refinance, a Rate and Term Refinance, or a Conventional Refinance to lower your rate, a higher credit score will save you money.

Call The Home Loan Expert Team in Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656.  You can always apply online at for your VA Loan, and for your other mortgage needs, and we’re also open on Saturdays and will come to you to help close your loan. We work hard to make it easy on you.  Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?


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