I know that the higher your credit score, the lower your mortgage interest rate will be. Is there a formula for calculating an interest rate? Fortunately, there's not a standard scale. Each lender decides what kind of risk you will be and how much more than a top credit score applicant you will have to pay. They not only consider your current credit score but also your credit history and the information in your loan application. They don't take their best rate and simply tack on a set premium because you have less than an A credit score. That said, the MyFico.com website does show how mortgage rates vary by different credit score ranges. As I write this today, the site shows that the national average annual percentage rate, or APR, on a 30-year fixed-rate mortgage for a person with a FICO score between 760 and 850 is about 3.5 percent. For a person with a credit score between 620 and 659, the interest rate charged by a mortgage company will be about 1.3 percent higher. Each mortgage company or lender determines its own rate, but this gives you an idea of how they calculate. Of course, the lower your score is, like 580 or less, the higher your interest rate will be. You could qualify for a higher credit score within months or a year if you pay down some debt and make all of your payments on time. Don't give up a paid-off credit card, because it's to your advantage to have available credit that isn't being used. The difference in interest rates shows why it's so important to get your credit history on track before applying for a loan. Most negative information drops off your credit report in seven years. The exceptions are a Chapter 7 bankruptcy filing or an unpaid judgment against you on a law suit. These items stay on a credit report for 10 years.