Borrowers in the city with the highest credit scores pay interest rates on mortgages that are 29 basis points less than borrowers in the city with the lowest scores.
The highest average credit scores of any metropolitan statistical area last year was 673. That was in the San Francisco-Oakland-Fremont, California, MSA.
The No. 2 MSA, which also had an average credit score of 673, was the
San Jose-Sunnyvale-Santa Clara, California, MSA. The area includes Silicon Valley.
The findings were based on a report from LendingTree. Credit scores from more than 4 million loans requests made through LendingTree in 2015 were analyzed.
Next up was the
Bridgeport-Stamford-Norwalk, Connecticut MSA, where the average credit score was 664.
After that was 664 in the Boston-Cambridge-Quincy Massachusetts-New Hampshire MSA.
No. 5 was the
Oxnard-Thousand Oaks-Ventura, California, MSA, where the average score came in at 663.
At the other end of the spectrum was the Jackson, Mississippi, MSA, where credit scores averaged just 620.
LendingTree noted that corresponding fixed interest rates on purchase mortgages averaged just 4.15 percent for borrowers whose scores were at least 720.
But the average rate jumped to 4.93 percent for borrowers with scores between 620 and 639.
Interestingly, interest rates for scores of between 580 and 619 were just 4.68 percent. The rate likely reflects the lower rates as of late on mortgages insured by the Federal Housing Administration — which allows loans to borrowers with worse credit scores.
The disparity in interest rates between the best and worst MSAs is
29 BPS. This factors in an average rate of 4.64 percent for borrowers in the San Francisco area and 4.93 percent for Jackson, Mississippi, borrowers, based on LendingTree’s averages.
