Your credit score is one of the biggest levers affecting your mortgage — not just whether you qualify, but what rate you're offered and how much mortgage insurance might cost. Understanding what actually shapes that number puts you in a much stronger position going into the loan process.
What Goes Into a Credit Score
The most widely used scoring models weigh several factors: payment history (roughly a third of the score, and the single biggest factor), amounts owed relative to available credit, length of credit history, new credit inquiries, and the mix of credit types you carry. Mortgage lenders often pull scores from all three major credit bureaus — Equifax, Experian, and TransUnion — and typically use the middle of the three scores (or the lower of two, for joint applications) to evaluate the loan.
How Your Score Affects Your Rate
Lenders use risk-based pricing, meaning your interest rate is tied directly to your credit profile. Borrowers with higher scores are statistically less likely to default, so they're offered lower rates and better terms. The gap between a very good score and a fair score can mean a meaningfully different interest rate — and over a 30-year loan, even a fraction of a percentage point adds up to thousands of dollars. This is true across loan types, though FHA and VA loans tend to have somewhat more forgiving credit requirements than conventional loans.
Minimum Score Requirements by Loan Type
Requirements vary by lender and by specific loan program, but as general benchmarks: conventional loans typically look for scores in the high 600s or better for the best terms, FHA loans can accommodate scores as low as 500-580 with a larger down payment or standard down payment respectively, and VA loans don't set a hard minimum through the VA itself, though individual lenders usually apply their own floor. These are starting points for a conversation, not guarantees — a strong score alongside other weak factors (high debt, thin income documentation) can still complicate approval, and vice versa.
Practical Ways to Improve Your Score Before Applying
- Pay down revolving balances. Credit utilization — the percentage of your available credit you're using — is one of the fastest levers to move. Getting balances below 30%, and ideally below 10%, of your limits can produce a visible bump within a billing cycle or two.
- Don't close old accounts. Length of credit history matters, and closing a long-standing account can shorten your average account age and reduce your available credit, both of which can hurt your score.
- Avoid opening new credit before and during the loan process. New inquiries and new accounts temporarily lower your score and can also raise red flags during underwriting. As a rule of thumb, don't apply for a car loan, credit card, or furniture financing while your mortgage is in process.
- Dispute errors. Credit reports contain mistakes more often than people expect. Reviewing your reports for accounts that aren't yours, incorrect late payments, or outdated information — and disputing them — can sometimes resolve quickly.
- Keep paying everything on time. There's no substitute for on-time payments; it's the single heaviest-weighted factor and the one that compounds the most over time.
A Note on Credit Inquiries
When multiple mortgage lenders pull your credit within a short shopping window (typically 14-45 days depending on the scoring model), those inquiries are usually counted as a single inquiry for scoring purposes. That means shopping rates among a few lenders in a compressed timeframe shouldn't meaningfully hurt your score — it's a myth that rate shopping itself is a credit risk.
If your score needs some work before you apply, it's worth having that conversation with a loan officer early. A few months of targeted improvement can sometimes move you into a better pricing tier.