How does your credit score affect interest rates?

Home Forums Credit Reports & Scores How does your credit score affect interest rates?

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    Jordan Moore
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    Team StellarFi
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    A higher credit score is meant to indicate a lower risk for lenders. That is, the higher your credit score, the more reliable you are considered as a borrower. This is why lenders are willing to negotiate a lower interest rate if you have a higher credit score (usually 670 and above).

    You are likely to pay lower annual percentage rates (APRs) on credit cards and can negotiate a lower interest rate on auto and home loans if you show a history of good credit behavior: on-time payments, low credit balance, low credit utilization ratio, and a diverse credit mix.

    The interest rates you pay are also significantly influenced by other factors like your income, cash reserves, and debt-to-income ratio. This is more relevant for auto and mortgage loans where factors like the model year, brand, location of the house, down payment, and the duration and type of loan are also influential in the amount of interest you pay.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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