How can credit scores affect the interest rate I receive?
FICO scores are used in determining the price of a loan because they are believed to be good predictors of a borrower’s ability and willingness to repay the loan. Many mortgage loans are sold to investors who will pay a more favorable price for loans because they are less likely to default. Thus, applicants with a lower FICO score may pay higher prices for their loans because of the higher risk of default and loss. The Fair Credit Reporting Act is in place to protect individuals from unfairly high FICO Scores.
