Do FICO Scores Affect Your Interest Rates When You Have Bad Credit?

Your FICO score, which is an acronym for Fair Isaac Corporation (the first credit bureau-based credit scoring system, which was introduced in the mid-1980s and didn’t get “big” until 1995), is important when it comes to buying a house – especially if you’re buying with bad credit. Here’s why.

Your FICO Score and Interest Rates

The higher your FICO score after a bankruptcy or foreclosure, the more competitive rates you’ll get. Typically, if you have the following FICO score, this is how much extra you’ll pay over the prevailing rate:

  • 600 – 640: + 1.625%
  • 560 – 580: + 2.875%
  • 540 – 559: + 3.425%
  • 500 – 540: + 3.875%
  • Under 500: + 6.25%

With numbers like these, it makes sense to do whatever you can to get your FICO score up before you apply for a loan. These extra interest percentages occur after you’ve waited to buy a home with poor credit, so use that time to build your score as best you can.

Are You Buying a Home in Irvine?

If you’re thinking about buying a home in Irvine or any of the surrounding communities, we can help you find one that’s just right for your needs (and your budget).

Call us at 949-385-1684 or get in touch with us online to let us know what you’re looking for.

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