We saw this recently, and thought it was an accurate depiction of the fact that scores under 720 hurt you in the pocketbook these days! How Much Does Bad Credit Cost You? Thousands upon thousands of dollars each year!
To create your mortgage credit score, the credit scoring system analyzes various elements of your current credit situation, including your debts, payment history, and credit types.
It’s important to understand that payment history accounts for only 35% of your overall score, so it takes more than paying your bills on time to increase your score. In today’s market, a score of 620 or below would be cause for concern, because even a small difference in your credit score can cost you big.
In fact, Fannie Mae announced earlier this year that any loan in which the borrower’s FICO score falls below 680 will incur either higher interest rates or fees charged at the time of closing of up to 2.00%. For example, on a conventional loan amount of $300,000, a borrower with a FICO score of 680 or lower, would be required to pay $4,000 or experience a higher interest rate. This means clean up your credit now or pay a higher price later.