This graph shows Charlotte home affordability based on credit score, interest rates

Interest rates have been the talk of the real estate world recently, with mortgage rates rising to levels not seen in years as white-hot markets try to cool.

Higher rates across the board mean more expensive mortgages for folks looking to buy a home, but the market isn’t the only thing that influences interest rates. Your individual financial situation, especially your credit score, impacts the rate you’ll be offered by lenders when you apply for a mortgage.

Here’s what to know about credit scores and interest rates on mortgages, and how to improve your own chances of getting the best rates available:

Credit scores and interest rates on mortgages

Regardless of whether interest rates on mortgages are going up or down, your credit score impacts the rate you’ll get from lenders. Even small differences in rates can make a big difference in what you’ll ultimately pay over the life of your mortgage.

Use the graph below to see what your credit score would get you in today’s market (Note: This graphic will update as rates fluctuate):

Tips for improving your credit score

If you’re thinking about buying a home in the future, there are steps you can take to improve your credit score before applying for a mortgage. The mortgage lender Fannie Mae recommends:

• Using credit cards “in moderation” and maintaining a low balance on them

• Paying your bills on time

• Not opening an excessive amount of credit cards

• Avoiding closing credit cards and therefore impacting “the total amount of credit you have available and how much you have used”

• Avoiding opening a new credit card or making a big purchase “within six months before trying to buy a home”

This story was originally published November 11, 2022 1:26 PM.