Read about the effect on your credit score mortgage rates. A bad credit score can drive your mortgage rate high and a good credit score can keep it low. But did you know that your credit score may not be the only driving factor behind your rate? Read more to find out.

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Credit Score Mortgage Rates
Borrowers like to blame their low credit score for high mortgage rates, higher credit card fees, and rates which are higher than expected. It is true that having a low credit score will increase your mortgage rates and also credit card rates, but there are other factors at play here. Besides having your FICO score as your determining factor to getting a loan and also rates and fees, here are other factors that take into consideration.

One example is your loan-to-value ratio if you are getting a home equity line of credit, or HELOC. This is the percentage of your home’s actual appraised value to the amount of the loan you are getting.

The way your interest rate is determined in this case is based on the loan-to-value ratio and lenders base this on a ratio. For example, they will give a specific interest rate for loan-to-value ratios of 70%-80% and give another interest rate from people who have a loan-to-value ratio of 80%-90%.

Check your credit score here so that you get the best mortgage rates.

The biggest mistake people make here is to value their home incorrectly. This changes the ratio in the loan-to-value, thus the interest rate you expect to receive. Be sure to accurately estimate your home value.

Other variables in Credit Score Mortgage Rates
Other variables that can affect how much you have to pay in interest for a loan can include:
The term of the loan: The longer the term, the more you end up paying. If you’re getting a car loan, try to get the shortest possible term that you can afford. Terms can range from 12 months to 72 months.

Whether or not you will be living in your home. If you are borrowing to rent versus occupying the home, you will get better rates if you live in your home rather than rent it out.

The amount of the loan that you are borrowing. Home loan rates under $400,000 may have lower interest rates than if you are going for a jumbo loan or higher amounts.

Variable or fixed rate loans. Variable or adjustable rate mortgages (ARM), may have a lower starting interest rate, but these rates can increase as much as the interest rate caps.

Look out for hidden fees. There may be hidden fees in points, annual fees, or termination fees.

Besides mortgage rates is also credit card interest rates. Credit card companies have been offering teaser introductory rates of low percentages such as 0% interest rates. More often then not, these rates only last for a limited amount of time – anywhere from 6 months to a year at the most. If you get an offer like this, be sure to keep a time table on when this is going to end and pay off the balance before then.

Make sure you check your credit score to see how you stack up.