Poor Credit Is Expensive

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Low Credit Scores accounted for one third of all of mortgage loan applications made across the country during September being turned down.

Borrowers with credit scores under 620 were refused even when they had down payments up to 25%. According to myFICO.com this minimum requirement eliminates 29.3% of the population who might wish to get a mortgage.

Note: While FHA will insure loans to otherwise well qualified borrowers with lower scores, the Banks will not make such loans.

Meanwhile, the lowest interest rates went to mortgage borrowers who were among the 47 percent of Americans with excellent credit scores of 720 or above.

In the first half of September, borrowers with credit scores of 720 or above got an average low annual percentage rate (APR) of 4.3 percent for conventional 30-year fixed mortgages. Borrowers with mid-range credit scores between 620 and 719 received APRs between 4.44 and 4.73 percent, with the APR rising as credit score drops. Those with credit scores below 620 received too few loan quotes to calculate average low APR.

The message is very clear. A poor credit score is expensive even if you can get a Mortgage.

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