Can a variable rate loan’s interest rate change based on changes in your credit score during the life of the loan?

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Can a variable rate loan’s interest rate change based on changes in your credit score during the life of the loan?

Asked on March 27, 2012 under Bankruptcy Law, Texas

Answers:

B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The most direct answer is yes.  But the extent that it can change and how often it can change will depend on the terms and conditions set out in your credit agreement.  A variable interest rate is an incredibly risky venture.  If you are not comfortable with a constantly fluctuating interest rate, you may want to consider switching the loan or note to a fixed rate note.  It may cost a little more on the front end, but it can also give you more stability and protection on the back end.


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