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How Your Credit Score Affects Interest Rates

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I was taking advantage of a promotion by myFICO and Equifax that let you see your credit score for free (it was a promotion for the first 10,000, sorry :( , but it was also no strings from what I could tell, I already had an Equifax login from checking my credit history for free annually, so it took 10 seconds) when I saw these charts comparing credit scores to APRs on various loans, here’s one for a 30 year fixed mortgage:

Credit Score 30 Yr. Mortgage
760-850 5.766%
700-759 5.988%
680-699 6.165%
660-679 6.379%
640-659 6.809%
620-639 7.355%
600-619 9.158%
580-599 9.744%
550-579 10.117%
500-549 10.502%



As you can see, the difference between a 759 score and a 760 score is .222% on your 30-year fixed mortgage loan. If you have a $100,000 loan, the 0.222% turns into an extra $2,149.71 in interest over the course of the loan. OK, so that’s not a big deal right? But if you could get your credit score up from 639 to 640, you drop your interest rate from 7.355% to 6.809%, a difference of 0.546% (worth $5,509.24 on that same loan). If the loan gets higher, you’re talking about real money here.

That’s why it’s important to know what your credit score is before you go out and get a loan and why you try your hardest to improve your credit score. While I’ve never used it, the credit score experts over at Credit Boards seem to love myFICO.

One note of caution, your interest rate isn’t determined solely on your credit score. There are other factors involved but the credit score is an integral part of that equation.

Here were some other rates (for comparisons sake):

15 Year Fixed Conforming Mortgages

Credit Score 15 Yr. Mortgage
760-850 5.620%
700-759 5.842%
680-699 6.019%
660-679 6.233%
640-659 6.663%
620-639 7.209%
600-619 9.308%
580-599 9.894%
550-579 10.267%
500-549 10.652%

36 Month New Auto Loan

Credit Score 36 Mo. New Auto
720-850 6.235%
690-719 7.751%
660-689 8.863%
620-689 11.265%
590-619 14.703%
500-589 15.582%

10 Year Fixed Home Equity Loan

Credit Score 10 Yr. Home Eq.
740-850 7.920%
720-739 8.220%
700-719 8.720%
670-699 9.495%
640-669 10.995%
620-639 12.245%

{ 11 comments, please add your thoughts now! }

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11 Responses to “How Your Credit Score Affects Interest Rates”

  1. Frugal Dad says:

    I don’t track my score too closely, unless I’m planning a major purchase. Actually, the only thing I’ve borrowed recently is money for a house purchase. I’m trying to live debt-free for the most part, but am not out to intentionally sabotage my score like some in the anti-FICO crowd. Your post is a great example of how just a small difference in score can make a big difference across the life of a loan.

  2. Sarah says:

    I also pulled my score from Equifax and was pretty pleased to find I have a 742. :-) I guess I’m doing better than I thought with debt repayment and keeping everything in order! I was really interested in the mortgage rate charts but I don’t know much about mortgages. Maybe you could add on to this post explaining the differences between a conforming and non conforming mortgages? :-) Thanks Keep up the good work

  3. jim says:

    Sarah, conforming and non-conforming refers to the size of the loan. Conforming loans are those that Freddie Mac and Fannie Mae can purchase or guarantee, non-conforming loans (also known as jumbo loans and other names) are those that they cannot.

    Whether a loan conforms or not is generally based on the size of the loan, before the legislation earlier this year that limit was set by the Federal Housing Authority at $417,000 for one-family first mortgages. With the stimulus package, that limit was adjusted for geographic regions and can be much higher in some areas.

  4. MoneyBeagle says:

    Good information and wow, rates on auto loans have gone up a lot since we last purchased a car. Good to know!

  5. Shehzada says:

    I tried to pull my free credit score but didn’t get lucky. Apparently they only had 100 free scores to give. I can never win!

  6. Jim says:

    Looks like the promotion is ended. I tried it too and got the message:
    “We’re sorry – we’ve already given away 10,000 free FICO scores. Thank you for your interest. Please stay tuned for new and exciting FICO score promotions.”

  7. Patrick says:

    Thanks Jim for the great numbers. I never knew that you have to have above a 760 to truly get the best interest rate. With the credit crisis this country is currently going through, I am not that surprised that lenders are becoming more strict with there standards as they should be.

  8. Disgruntled says:

    Looks like a self-fulfilling proposition.

  9. david says:

    a CC company wrongly put a bankruptcy on my credit this hurt my credit score. my fico was 830

    no its down in the 750 range. I contacted the CC company in June of 08 to fix the problem. they said they would and I thought every thing was ok
    I start the process of buying a house and find out they never fixed anything.

    today I signed the loan paper work for my new house and my fico score is still down in the 750 range.

    this really makes me upset—I have been working since I was in 8th grade and have never ever failed to pay my bills

    never missed a payment on anything never late on anything
    then some CC hurts me my credit sore.

    hell I was made that it was only 830

    David

  10. Pac Man says:

    Curious, my score isn’t the greatest, 648, and it has moved up from where it was. I have all my liens paid off, and now am in the process of rebuilding my credit. How long does it take to rebuild it to the excellent credit range?
    Any advice would help, and i appreciate all the helpful advice you guys have offered.

  11. Matt Walker says:

    Curious, my score isn’t the greatest, 648, and it has moved up from where it was. I have all my liens paid off, and now am in the process of rebuilding my credit. How long does it take to rebuild it to the excellent credit range?
    Any advice would help, and i appreciate all the helpful advice you guys have offered.


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