Effect of Credit Scores on Mortgage Rates

Yesterday, I wrote about my trip to Boston. I am definitely not caught up on my reading, writing, responding to comments, or sleeping. Not even close, and I don’t think I will be able to do so until this weekend. I should be able to catch up completely this weekend. Additionally, I wrote about how easy it was to refinance my mortgage. During the refinancing process I was able to pull some great information about my credit score from the Wells Fargo representative.

My Credit Score

In order to refinance, Wells Fargo had to pull my credit score. My three credit scores were 751 (TransUnion), 751 (Equifax) and 746 (Experian). They use the median (middle) number as the official credit score for refinancing purposes. I pulled out the credit scores from my original mortgage from 5 months ago (October 2008): 752 (TransUnion), 723 (Equifax) and 722 (Experian). I found it very interesting that overall my credit score increased over such a short period of time.

In the 5 months between my original mortgage and today, I opened a new credit card account, slightly reduced my car loan and accrued five more months of on-time revolving credit payments. Apparently that was enough to increase my score. The anatomy of a credit score will always be a mystery and never an exact science.

Effect of a Credit Score on your Mortgage Rate

While the Wells Fargo representative was entering information for my loan application, I took the opportunity to ask some questions about my credit score and the effect it had on my mortgage rate. I was told that 740+ is the highest tier. If you are in the highest tier you don’t actually get a lower rate. If you are below 740, you start having risk factor adjustments added to your rate. In summation, there is a base rate and risk factor adjustments increase your rate as your credit score drops.

I hope this information is helpful, I found it interesting at the very least. Also, I find it very interesting that the Netherlands were able to defeat the Dominican Republic. TWICE!! I love me the WBC.