By the CalcLedger editorial team · Updated September 2026 · Examples use illustrative rates · How we calculate
Your credit score is one of the biggest factors in the mortgage rate you're offered, and small rate differences add up to large amounts over 30 years. Understanding how lenders use your score, and improving it before you apply, can be one of the highest-paying financial moves you make.
Why lenders care about your score
A credit score is a lender's shorthand for how likely you are to repay. Higher scores mean lower risk, and lenders reward lower risk with lower rates. For conventional loans, Fannie Mae and Freddie Mac add pricing adjustments based on your score and down payment, so lower scores often pay higher rates or fees. Most mortgage lenders look at FICO scores from all three credit bureaus and use the middle one.
What different scores can cost
Rates change daily and vary by lender, so the rates below are only illustrative. The pattern, higher rates at lower scores, is what matters. On a $320,000, 30-year fixed mortgage:
| Credit score | Example rate | Monthly P&I | Extra per month vs. 760+ | Total interest | Extra interest vs. 760+ |
|---|---|---|---|---|---|
| 760+ | 6.50% | $2,023 | — | $408,142 | — |
| 700–759 | 6.75% | $2,076 | $53 | $427,185 | $19,043 |
| 660–699 | 7.10% | $2,151 | $128 | $454,181 | $46,038 |
| 620–659 | 7.60% | $2,259 | $237 | $493,398 | $85,256 |
In this example, a borrower in the 620s pays about $237 more every month and about $85,000 more in interest over 30 years than a borrower above 760, for the same house and the same loan.
Total interest on a $320,000 mortgage, by credit score
30-year fixed, illustrative rates
The hidden second cost: mortgage insurance
If you put down less than 20% on a conventional loan, your score also sets your private mortgage insurance rate. PMI can cost two or three times as much for a borrower in the 600s as for one above 760. That's one reason borrowers with lower scores often choose FHA loans, whose mortgage insurance doesn't vary by credit score. See our PMI guide and FHA vs. conventional comparison.
Your score also affects how much you can borrow
A higher rate means a higher payment for the same loan amount. Since lenders limit your payment to a share of your income, a higher rate also lowers the home price you can afford. Try the same income at 6.5% and at 7.6% in the home affordability calculator to see the difference.
Minimum scores by loan type
- Conventional: generally 620 minimum. The best pricing usually starts around 760 to 780.
- FHA: 580 with 3.5% down, or 500 to 579 with 10% down, though many lenders set their own higher minimums.
- VA: the VA sets no minimum, but most lenders look for around 620. See VA loan basics.
- Jumbo loans above the conforming limit: often 700 or higher.
How to raise your score before applying
Even a 20- to 40-point improvement can move you into a better pricing tier. The most effective steps:
- Check your credit reports for errors. You can get free reports from all three bureaus at AnnualCreditReport.com. Dispute incorrect late payments, balances, or accounts that aren't yours.
- Pay down credit card balances. Credit utilization, your balances as a share of your limits, is one of the fastest things to improve. Getting below 30% helps. Below 10% is better. Paying before the statement closing date lowers the balance reported to the bureaus.
- Pay every bill on time. Payment history is the largest single factor. Set up autopay for at least the minimum on every account.
- Don't open or close accounts right before applying. New accounts add hard inquiries and lower the average age of your credit. Closing old cards reduces your available credit.
- Keep old accounts open, especially your oldest cards, if they don't have annual fees.
If you have high-interest card debt, paying it down helps twice: it raises your score and lowers the debt payments that count against your debt-to-income ratio. Our balance transfer vs. personal loan guide covers ways to pay it down faster.
How long it takes to improve
Some changes work fast. Paying down card balances usually shows up in your score within a month or two, as soon as the lower balances are reported. Correcting an error can take 30 to 45 days after you file a dispute. Recovering from late payments or collections takes longer, because they stay on your report for up to seven years, though their effect fades over time. If you're planning to buy in six to twelve months, start now: that's often enough time to move up at least one pricing tier.
Rate shopping won't wreck your score
Many buyers avoid getting multiple quotes because they worry about hard inquiries. Credit scoring models treat multiple mortgage inquiries within a short window, typically 14 to 45 days depending on the model, as a single inquiry. Getting quotes from three to five lenders in the same couple of weeks is smart, and the savings from finding a lower rate far outweigh the small effect on your score.
Should you wait to buy until your score improves?
If a few months of paying down cards would move you up a pricing tier, waiting can save tens of thousands of dollars. If your score needs years of rebuilding, it may make more sense to buy with an FHA loan now and refinance later once your credit improves, as long as the payment fits your budget today. Compare both scenarios in the mortgage calculator.