Low Credit Score Means Higher Interest Rate
REM # F769
By Ilyce R. Glink
Summary: A ThinkGlink reader has a credit score in the 500s and would like a mortgage. Ilyce explains the challenges this reader faces.
Q: What interest rate will a credit score in the mid 500s get?
A: It depends on what kind of credit you're looking for. According to www.MyFico.com,
if you have a credit score of 760 to 850, and you're looking for a 30-year fixed
rate mortgage, you'll be able to get interest rates of approximately 6.1 percent.
That's the highest tier for credit.
But if your credit score is 500 to 579, which is the bottom tier, and well into
the subprime world, the same loan would cost you 10.43 percent – if you
can even get it. Many of the subprime lenders have been raising the minimum
credit score required for loans.
Bear in mind, it's entirely possible that you wouldn't be able to qualify for
a loan with a credit score of 500.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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