Guide to interest rate to charge

The chart below is intended as a guide only. You need to decide what interest rate you consider reasonable. The rate you charge should bear some relationship to the current conventional, excellent credit interest rate.

Credit rating	Cash down payment	Interest Rate to Charge above current conventional rate
A+.  No 30 day late last 12 mths  FICO=680+	5%	+2%
	6-12	+1%
	13-20	+0.5%
A 1 30 day late last 12 mths. FICO=660-680	5%	+2.5%
	6-12	+1.5%
	13-20	+1%
A- 2 30 day late last 12 mths. FICO= 640-660	5%	+3%
	6-12	+2%
	13-20	+1.5%
B+ 3 30 day late last 12 mths. FICO=620=640	5%	+3.5%
	6-12	+2.5%
	13-20	+2%
B 4 30 day late last 12 mths. FICO= 600-620	5%	+4%
	6-12	+3%
	13-20	+2.5%
C 60 day lates last 12 mths. FICO=520-600	5%	+5%
	6-12	+4%
	13-20	+3%

As you can see, the lower the cash investment and the lower the credit score, the higher the interest rate that you should ask.

Example: Assume the current conventional interest rate is 7.5%. Assume your borrower is B credit rating and is putting down 6-12% cash. Using the chart above, you would add 3% to the 7.5% rate for an interest rate of 10.5% per year.