
What Factors Do Lenders Consider When Determining My Interest Rate?
Quick Answer
Lenders consider your credit score, payment history and the current economic conditions when determining interest rates. Generally speaking, the higher your credit score, the less you can expect to pay in interest. But loan-specific factors such as repayment terms play a role too.

You can think of interest as the cost to borrow money. The lower the interest rate you're able to qualify for, the more money you'll save over time when you borrow. That's why it pays to know what goes into determining an interest rate.
Lenders consider your credit score, income, payment history and broader economic benchmarks such as the prime rate when determining an interest rate on a loan, credit card or line of credit.
Read on to find out what factors have the biggest influence on interest calculations for various types of credit, such as credit cards, mortgages and other types of loans—plus how you can qualify for the best interest rates.
How Lenders Determine Credit Card APRs
Credit card issuers set your interest rate based on your creditworthiness, among other factors. Here's what goes into determining your credit card's annual percentage rate (APR).
1. Your Credit Report and Scores
Your credit score is typically the most impactful factor in determining what credit cards you'll qualify for—and what interest rates lenders are likely to offer you. Credit card issuers usually offer the lowest interest rates to borrowers with high credit scores. A lower credit score can be an indicator of a risky borrower, so lenders often charge higher interest rates in this case to offset the risk.