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How credit scores affect your interest rate

A high credit score when you apply for a mortgage could save you thousands of dollars in interest over the life of your loan.

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Your credit score represents your overall credit history. It’s based on information in your credit report, which includes whether you pay your bills on time and the total debt you carry. Lenders consider your score an indicator of how likely you are to repay your mortgage.

How lenders use credit scores

Credit scores generally range from 300 (the lowest) to 850 (the highest). This number can make a big difference in determining whether you qualify for a mortgage and the terms you are offered.

A higher score increases a lender’s confidence that you will make payments on time and may help you qualify for lower mortgage interest rates and fees. Also, some lenders may reduce their down payment requirements if you have a high credit score.

On the other hand, a credit score under 620 could make it harder to get a loan, and your interest rates may be higher. Lenders differ, but they generally consider 670 or above to be a good credit score.

If you plan to get a $300,000, 30-year fixed-rate mortgage, improving your credit score in this example could save you more than $93,000 in interest payments over time.

A high credit score can save you thousands in interest
Credit score 760–850 620–639
APR1 2.373% 3.962%
Monthly payment $1,166 $1,426
Interest paid $119,634 $213,245
  1. APRs are based on national averages and do not reflect Bank of America’s rates.
    Source:, October 2020

This example is provided for comparison purposes only and does not constitute a commitment to lend nor is intended to guarantee that you currently qualify for the example APRs above.

Find your credit score

Visit to get a free copy of your credit report, which reflects your account and payment history. You are entitled to receive one free report every year from each of the three credit reporting agencies—Equifax, Experian and TransUnion. Your report doesn’t include your credit score, but it shows you what information the bureaus take into account in their credit score calculations. You may be able to obtain a free copy of your credit score through your bank or credit card provider.

Close Disclaimer

The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

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