So if you’re on the borderline of 760, 700, or 680, it’s best to avoid opening any new credit accounts for about 6 months before a mortgage.
Otherwise a couple of cards could end up costing you ,000 in extra payments on your mortgage.
Here is a national sample of mortgage rates by FICO score at the time of this article collected by Informa Research Services on behalf of FICO: The difference between a marginal excellent credit score (700-759) and a truly excellent one (760 ) is about $50 a month on a $400,000 mortgage.
That’s $600 a year, and $18,000 over the life of the mortgage.
And nowhere is that more clear than when you try to get a mortgage or refinance an existing one.
The process is usually murky, but a recent survey of loan officers by FICO sheds some light on what really matters.
The survey asked what factor would make a loan officer most hesitant to approve a mortgage, and the number one answer took the lead by a wide margin: Debt to income is the biggest thing mortgage lenders look at, much more than your FICO score itself.
Why is debt to income a bigger factor than your score?
The key here: Be careful about what other credit you apply for before you apply for a mortgage.
Loan officers don’t want to see a lot of recent credit applications, and each one can temporarily ding your score five or 10 points.
We’ve put together a litmus test of seven signs you could be working with a shady credit repair company.