A prospective homebuyer recently called to get information behind the decline in her credit score from 725 to 696. Her loan officer said it was from a recent inquiry. Not feeling that was correct, she called. With this lower credit score, her rate would increase by 3/8%, making her mortgage payment rise by $73 a month. That is a lot of money. She was given the actual information to know what she could save by increasing her score back to 725.
What You Need to Know
Knowing how a change in your Classic FICO Credit Scores can impact your savings is critical. There are two important facts to know.
- Most every homebuyer can lower their mortgage payments by increasing their scores just a few points.
- 99.99% of loan officers do not know the basics about your FICO Scores. Really!
Your Potential Savings
Let’s take a look at something hidden from you. On a 5% down 30 year fixed $350,000 conventional mortgage, increasing a Classic FICO Credit Score one point higher can lower your payment by the following:
Savings on a $350,000 Mortgage (30 Year)
| Initial Credit Score |
One Point Increase too... |
Monthly Mortgage Savings |
| 639 |
640 |
$69.87 |
| 659 |
660 |
$49.23 |
| 679 |
680 |
$121.22 |
| 699 |
700 |
$80.74 |
| 719 |
720 |
$51.37 |
| 739 |
740 |
$57.01 |
| 759 |
760 |
$40.83 |
Someone who increases their FICO Classic Credit Score from 639 to 640, will lower the monthly payment by $69.87 in this example. Increase the score from 679 to 680, the mortgage payment drops $121,22. Increase the score from 759 to 760, lowers the payment $40.83.
Even better, a person that can raise their Classic FICO Credit Score from 679 to 700 (21 points), can lower the monthly mortgage payment by $201.96 a month ($121.22 plus $80.74).
What to Do!
My Credit Plan has an average score improvement of 73 points. The potential savings could be even more than the $201.96.
Taking a few days, find out from My Credit Plan what you can do to raise your scores, and your savings can be several hundred dollars.
This is what most every homebuyer does not know. Now is the time to know this critical information!
Your Loan Officer?
Finally, 99.99% of loan officers do not know what to do to maximize your FICO scores – and they REALLY don’t care. It is you paying the monthly payment, not them. This is a subject for another blog.