Definition
Credit scores (typically 300-850) represent your creditworthiness based on payment history, debt levels, credit age, mix, and recent inquiries. Most mortgage lenders require minimum 580-620 scores, with better rates above 740. Small score differences significantly impact interest rates.
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Credit scores are calculated based on payment history, credit utilization, length of credit history, credit mix, and recent inquiries. Most mortgage lenders require a minimum credit score of 580-620, with better rates available for scores above 740. A higher credit score generally results in better interest rates and loan terms.
Pro Tip
Check your credit score and report months before applying for a mortgage to address any errors or improve your score.
Example
A borrower with a 760 credit score qualifies for a 6% interest rate, while a borrower with a 680 score might only qualify for 7.2% on the same loan.