Your credit score is one of the most important factors in getting a mortgage. Here's what you need, how it affects your rate, and what to do if your score isn't where you want it to be.
Your credit score is a three-digit number (ranging from 300 to 850) that tells lenders how likely you are to repay borrowed money. It's based on your history of paying bills, how much debt you carry, how long you've had credit, and other factors.
When it comes to mortgages, your credit score affects three critical things: whether you qualify for a loan, what interest rate you get, and which loan programs are available to you. A higher score means lower rates, more options, and potentially tens of thousands of dollars in savings over the life of your loan.
The good news? You don't need perfect credit to buy a home. Programs like FHA loans allow credit scores as low as 580 (or even 500 with a larger down payment). Let's break down exactly what you need.
Where does your score fall? Here's what each tier means for your mortgage options.
800 - 850
Exceptional
Best rates available. You'll qualify for the lowest interest rates and most favorable terms from virtually every lender.
740 - 799
Very Good
Excellent rates. You're well above average and will qualify for very competitive rates across all loan types.
670 - 739
Good
Solid position. You'll qualify for most loan programs with competitive rates, though not the absolute lowest available.
580 - 669
Fair
Homeownership is possible. FHA loans are a strong option. Rates will be higher, but you can still buy a home and refinance later as your score improves.
300 - 579
Poor
Limited options, but not impossible. FHA loans allow scores as low as 500 with 10% down. Building your score before applying will save you significantly.
Different loan programs have different minimum requirements. Here's a side-by-side comparison.
Minimum Score
580
500 with 10% down
Down Payment
3.5%
Key Details
Most popular option for lower credit scores. Government-backed with flexible requirements.
Minimum Score
620
No official VA minimum
Down Payment
0%
Key Details
For eligible veterans and service members. No down payment required. Lenders typically require 620+.
Minimum Score
640
Manual underwriting possible below 640
Down Payment
0%
Key Details
For rural and suburban properties. No down payment. Income limits apply.
Minimum Score
620
740+ for best rates
Down Payment
3% - 20%
Key Details
Most common loan type. PMI required under 20% down. Better rates for higher scores.
Minimum Score
700
720+ preferred
Down Payment
10% - 20%
Key Details
For loan amounts above conforming limits ($766,550 in most areas). Stricter requirements.
Even small credit score differences can cost you thousands over the life of a loan. Here's the impact on a $320,000 30-year fixed mortgage.
The difference between a 760 and a 620 credit score on this loan?
$322/month more — $115,920 extra in interest over 30 years
Whether you need 20 points or 100, these strategies will move your score in the right direction.
Payment history is the single biggest factor in your credit score (35%). Even one 30-day late payment can drop your score by 50-100 points. Set up autopay for at least the minimum payment on every account.
Keep your credit card balances below 30% of your credit limits — ideally under 10%. If you have a $10,000 limit, keep your balance under $1,000. This factor accounts for 30% of your score.
The length of your credit history matters (15% of your score). Keep older accounts open even if you don't use them often. Closing them shortens your average account age and reduces total available credit.
Each hard inquiry can lower your score by 5-10 points. Avoid opening new credit cards or financing purchases in the months leading up to your mortgage application.
One in five consumers has an error on their credit report. Check all three bureaus (Equifax, Experian, TransUnion) and dispute any inaccuracies. Correcting errors can provide an immediate score boost.
Ask a family member with excellent credit and a long account history to add you as an authorized user on their credit card. Their positive payment history can boost your score.
Common questions about credit scores and mortgages
Yes. An FHA loan allows you to buy a home with a credit score as low as 580 with just 3.5% down. While your interest rate will be higher than someone with a 740 score, homeownership is absolutely achievable. Many buyers purchase at 580, build equity, and refinance to a better rate once their score improves.
No. Checking your own credit score is considered a "soft inquiry" and has zero impact on your score. You can check it as often as you like through free services like Credit Karma, your bank, or AnnualCreditReport.com. Only "hard inquiries" from lenders affect your score, and even those have a minimal impact (5-10 points) and fall off after two years.
It depends on your starting point. Paying down credit card balances can boost your score within 30-60 days. Recovering from a late payment takes 3-6 months of on-time payments. More serious issues like collections, bankruptcies, or foreclosures can take 1-7 years to fully resolve. I can review your situation and give you a realistic timeline.
No. There are many different credit scoring models. Most mortgage lenders use FICO scores, but they may pull different versions (FICO 2, 4, or 5) from each of the three bureaus. Your mortgage FICO score is often different from the score you see on free apps. When you apply, your lender uses the middle of the three bureau scores.
Mortgage lenders typically use your middle score. If your three bureau scores are 590, 620, and 640, your qualifying score is 620. For joint applications, lenders generally use the lower of the two borrowers' middle scores. If your scores are borderline, there may be quick strategies to bring the lowest one up.
Not always. Some newer scoring models ignore paid collections, while older ones may actually show a temporary dip after paying. Medical collections under $500 are often excluded. FHA loans have specific rules about collections that may or may not require payoff. Let me review your specific situation before you make any moves — the wrong strategy can backfire.
Your credit score is just the starting point. I'll help you understand your full picture, identify the best loan programs for your situation, and create a plan to get you into a home — whether that's now or in a few months.