Credit Score
A credit score is a three-digit number (typically 300–850) that represents your creditworthiness based on your borrowing history. For mortgages, lenders use FICO scores from all three bureaus and typically use the middle score. Higher scores qualify for lower interest rates — even a 40-point difference can save tens of thousands of dollars over a loan's life.
Mortgage lenders use older FICO scoring models (FICO 2, 4, and 5) rather than the latest consumer versions you see on credit monitoring apps. Scores are influenced primarily by: payment history (35%), amounts owed / credit utilization (30%), length of credit history (15%), new credit inquiries (10%), and credit mix (10%).
For conventional loans, a 620 is typically the minimum, but rates improve significantly at 660, 700, 720, and 740+. On a $400,000 loan, the rate difference between a 650 and a 760 score can be 0.75–1.00%, saving roughly $175/month and over $63,000 over 30 years. If your score is borderline, delaying your purchase to improve it can pay off significantly.
To improve your score before applying: pay all bills on time, reduce credit card balances below 30% of limits (ideally below 10%), avoid opening new accounts, and don't close old accounts. Even 3–6 months of focused effort can lift a score 20–50 points.
Key Takeaway
A credit score is a three-digit number (typically 300–850) that represents your creditworthiness based on your borrowing history. For mortgages, lenders use FICO scores from all three bureaus and typically use the middle score. Higher scores qualify for lower interest rates — even a 40-point difference can save tens of thousands of dollars over a loan's life.
Related Terms
Frequently Asked Questions
FHA loans allow scores as low as 500 (with 10% down) or 580 (with 3.5% down). Conventional loans typically require 620+. VA loans have no official minimum but most lenders want 580–620.
Yes, but minimally. A hard inquiry typically drops your score 5 points or fewer, and multiple mortgage inquiries within a 45-day window count as a single inquiry.
Lenders pull FICO scores from all three bureaus (Equifax, Experian, TransUnion) and typically use the middle of the three scores for qualification.
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