Mortgage Monday: Poor Credit Equals Higher Rate, Right?

Po0r credit does not necessarily mean higher rates.

Everyone assumes that if you have poor credit you will be charged a higher rate and your  loan will cost you more. If you have a poor credit score and you cannot explain why you have a poor score, then yes, it is true that you will be charged a higher rate and the loan will cost you more. But if you can explain to the loan officer the reasons for the bad score, it may not cost you a higher rate. For instance, if you had a long-term illness or temporary loss of income, these unique situations should be explained to the loan officer. If you can convince him or her that you will repay the loan, but had a unique situation for the bad report, you may not have to pay the higher costs associated with a poor score.

If you do have some accurate information that reflects badly on your credit score, ask the loan officer to explain what you need to do to improve the score and how long it will take. The improved score can save you thousands of extra dollars over the life of the loan, so it is well worth the time and energy to improve your credit score.

Whether you have credit problems or not, it’s a good idea to review your credit report for accuracy and completeness before you apply for a loan. To order a copy of your credit report, visit, or contact:

Equifax: (800) 685-1111
TransUnion: (800) 916-8800
Experian: (888) 397-3742

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