Why Does Your Credit Score Matter?
Your credit score directly impacts your mortgage rate— a higher score means lower interest rates and monthly payments.
Credit Score Ranges & Loan Eligibility
| Credit Score Range | Loan Type | Typical Interest Rate |
|---|---|---|
| 760+ | Best conventional rates | 5.5% or lower |
| 700-759 | Conventional loans | 5.75% - 6.25% |
| 620-699 | FHA, VA, USDA, conventional | 6.5% - 7.25% |
| 580-619 | FHA, VA loans | 7.5% - 8.5% |
| Below 580 | Limited mortgage options | 8.5% or higher |
How Credit Score Affects Your Monthly Payment
Here’s how different credit scores impact monthly payments on a $300,000 mortgage (30-year loan).
| Credit Score | Interest Rate | Monthly Payment |
|---|---|---|
| 760+ | 5.5% | $1,703 |
| 700 | 6.0% | $1,798 |
| 650 | 7.0% | $1,996 |
| 580 | 8.0% | $2,201 |
How to Improve Your Credit Score Before Buying
- 💳 Pay down credit card balances – Keep credit utilization below 30%.
- 📆 Make on-time payments – Payment history makes up 35% of your score.
- 🛑 Avoid opening new credit accounts before applying for a mortgage.
- 🔄 Dispute credit report errors – Check reports for inaccuracies.
Can You Get a Mortgage with Bad Credit?
Yes, but expect higher interest rates and stricter loan terms. FHA loans allow scores as low as 580 with 3.5% down.
The Bottom Line
A higher credit score can save you thousands in interest over the life of your mortgage—improve it before applying!
“A good credit score can save you hundreds on your monthly mortgage— don’t overlook its impact!”
— Sarah Thompson, Mortgage Advisor
Frequently Asked Questions
What’s the minimum credit score for a mortgage?
Conventional loans require 620+, FHA loans allow 580+.
Does checking my credit lower my score?
No, checking your own credit is a soft inquiry and won’t hurt your score.
How fast can I improve my credit before buying?
It can take 3-6 months to see improvements if you pay down debt and make on-time payments.