When you apply for a home loan or a refinance, your credit score is the very first thing lenders look at. It tells them how reliably you pay back debt. A higher score not only increases your chances of approval but can literally save you tens of thousands of dollars in interest over the life of a 30-year mortgage.
How Lenders View Your Credit Score
Mortgage lenders categorize credit scores into different tiers. Where you fall on this scale determines which loan programs you qualify for and what interest rate you will be offered.
ExcellenT
740+
You qualify for the lowest interest rates and the best loan terms available in the market.
Good
670-739
Strong approval odds. You will get highly competitive rates, especially with a good down payment.
Fair
580-669
You can still get approved (often via FHA), but you may pay a slightly higher interest rate or PMI.
Needs Work
< 580
Approval is difficult. We highly recommend taking 3-6 months to improve your score before applying.
💡 Important Note: The credit score you see on free apps (like Credit Karma) is often a “VantageScore.” Mortgage lenders use a specific, stricter “FICO Score” model for mortgages. Your actual mortgage score might be slightly different.
Minimum Score Requirements by Loan Type
What’s the absolute minimum?
Different loan programs have different risk tolerances. While conventional loans are stricter, government-backed loans offer great flexibility for buyers with less-than-perfect credit.
4 Rapid Ways to Improve Your Score
If your score isn’t quite where it needs to be, don’t panic. Here are the most effective steps you can take right now to boost your profile before applying for a mortgage.
Lower Your Credit Utilization
Pay down your credit card balances so they are below 30% of your total credit limit. This is the fastest way to see a jump in your score within 30 days.
Check for Errors on Your Report
Request a free copy of your credit report from all three bureaus. Dispute any late payments or collections that are inaccurate or outdated.
Do Not Close Old Accounts
Even if you’ve paid off a credit card, leave the account open! Closing it reduces your total available credit and shortens your credit history, which will drop your score.
Stop Applying for New Credit
Every time you apply for a new credit card or car loan, a “hard inquiry” hits your report. Avoid any new credit applications for at least 6 months prior to a mortgage application.
Worried about your credit? Let’s check it together.
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