How much does Credit Score effect loan rates?

[phwadsworth]

  We know that credit scores effect that interest rate offered by lenders, but I'm not sure what a *significant* difference in credit score is.  Anyone else know for real (not anecdotes)?

  For instance, does the actual number matter more/less/same as the Tier?  For instance if you're just barely in "Excellent" credit and you slip down 5 points, out of Excellent, will that effect your score much more than if you slipped up 5 points?

  If you're solidly in the "Excellent" range (mid-900's Vantage, or low-800's FICO) does it matter if your score goes up/down 20 points yet stays in that same "mid" area? 

  Could any benefit be realized on mortgage rates by improving one's score from, for instance, 940 Vantage to 980 (or, 820 FICO to 840)?  Or is this splitting hairs for lenders?

[iamlindoro]

Nobody will be able to give you an absolute answer, because it will vary from lender to lender.  It's also important to remember the FICO has literally dozens of possible scores.  The one ordered by a lender (usually the "mortgage" score) is not calculated the same as the "consumer" score that you can purchase through the credit bureaus.  You might find that you are 50 or even 100 points +/- on the mortgage score (as I always seem to). 

If we're speaking in extreme generalities, if you have an excellent mortgage FICO, and you slip 5, 10, or 20 points but still remain within their top-tier range, it won't affect your rate.  For some lenders, this might be anything over 720.  For others, it might be 750. 

But yeah, to answer your question, there is a point of diminishing (disappearing) returns at the top end, usually between 720-750, where no further increase will affect your rate at all.

[RoseRelish]

It's been my experience that mortgage folks are a bit more flexible with credit scores and rates. It's because there is an actual human that looks at it and takes your entire financial picture into account. Online applications/approvals are much more reliant on the score, which makes sense.

For example, a few years ago I had a credit score somewhere between 680-720 but got the lowest possible rate from my mortgage lender because of the other tests (debt/income, total assets, etc). But I suppose it varies bank to bank.

[Bob W]

If you are over 800  you are golden for a mortgage assuming your debt to income ratio is low.

I smell a future home buyer here so let me just get ahead of that ----

1-  Buy a home 1/2 to 1/3rd below your approval level
2.  Put 20% down
3.  Get the longest term,  lowest interest rate and fewest points and add ons possible
4.  Don't let them fool you -- the rates and points etc.  are all negotiable for someone with 800+ FICO
5.  Don't buy a house just because "it is the thing to do"
6.  IMHO most people are better off financially renting until they save enough to buy a house outright
7. Don't get home fever ---"we have to buy,  the market's going up,  interest rates are going up,  blah, blah"

And always remember  --- "You don't own houses --- they own you"

[phwadsworth]

Thanks for the help all, very appreciated.

[Mr_Chin_Stubble]

4.  Don't let them fool you -- the rates and points etc.  are all negotiable for someone with 800+ FICO

Really my guy says he couldn't even put in less that 25% in his computer for 3 family house for the down p. And I believe him for some reason. My score is an 811 also.

[iamlindoro]

4.  Don't let them fool you -- the rates and points etc.  are all negotiable for someone with 800+ FICO

Really my guy says he couldn't even put in less that 25% in his computer for 3 family house for the down p. And I believe him for some reason. My score is an 811 also.

Bob was referring to the interest rates.  You're talking about the downpayment percentage.  25% is correct on multifamily if it is for a Fannie Mae/Freddie Mac backed investment loan.  20% if owner occupied.  These downpayments can be lower with exotic or nonstandard financing.