What to Know About Credit Scores Before You Apply for a Mortgage

Your credit score is one of the most powerful numbers in your financial life — especially when getting a mortgage. A difference of just 50-100 points can mean tens of thousands in interest costs or the difference between approval and rejection.

This guide covers everything you need to know about credit scores and mortgages—from minimum requirements to how rates affect you.

Key Takeaways

Minimum Scores Vary by Loan Type:

Some FHA lenders accept credit scores of 580+, conventional lenders often require 620+, and better rates are often available with higher credit scores.

Your Score Directly Impacts Your Rate:

Even a 20-point difference can affect your interest rate, which can add up over a 30-year loan.

Lenders Check More Than Just Your Score:

Payment history, credit utilization, credit mix, and recent inquiries all matter.

You May Be Able to Improve Your Score in 3-6 Months:

Strategic actions such as paying down balances and disputing errors can help increase your score.

Timing Matters:

Avoid new credit applications and major purchases in the 3-6 months before applying for a mortgage.

💡 Pro Tip: Once your credit is mortgage-ready, don't settle for the first rate you're offered. Upload your Loan Estimate to Fincast and let vetted lenders compete to beat your rate — no extra credit pulls, no spam.

Credit Score Ranges: What Lenders See 📊

Lenders use FICO scores ranging from 300-850:

740+ (Excellent):

Typically allows the most loan options at attractive rates and terms.

700-739 (Good):

Often allows for competitive rates with strong approval odds.

620-699 (Fair):

This is the conventional loan threshold for many lenders, but it may come with higher rates and stricter requirements.

580-619 (Below Average):

FHA loans are possible with 3.5% down with many lenders. They often come with higher rates and always require mortgage insurance.

Below 580 (Poor):

Some lenders may accept this credit score for FHA loans, but FHA requires a minimum 10% down payment. Focus on credit repair before applying.

What Lenders Actually Look At Beyond Your Score 🔍

Your three-digit score isn't the whole story. Lenders also consider:

Payment History (35% of your score):

Late payments, collections, and charge-offs may impact approval. Recent issues are more concerning, but each lender has different criteria.

Credit Utilization (30%):

Keep balances under 30% of limits, ideally under 10%. High utilization signals financial stress to lenders.

Length of Credit History (15%):

A longer track record is better because it shows a longer history of how you manage your finances. Don't close old cards before applying.

Credit Mix (10%):

Having multiple credit types demonstrates your ability to manage various obligations and may look favorable to some lenders.

New Credit Inquiries (10%):

Multiple hard inquiries can hurt your score, but mortgage shopping within 45 days counts as one inquiry, which is why the sooner you shop for your mortgage rates, the better.

How to Improve Your Credit Score Before Applying 📈

If you need to boost your score, follow this 3-6 month action plan:

1. Pay Down Credit Card Balances:

One effective way to improve your score is to pay down your credit card balances—target under 30% utilization, ideally under 10%. Pay balances before statement dates. (Utilization refers to your amount of outstanding debt compared to your total credit line.)

2. Dispute Any Credit Report Errors:

Check all three bureaus at AnnualCreditReport.com. Dispute incorrect late payments, wrong balances, or unknown accounts.

3. Make All Payments On Time:

Set up autopay and maintain a 6-month perfect payment history.

4. Become an Authorized User:

Ask a family member with excellent credit to add you to their card. Their positive history may boost your score if the creditor reports authorized users to the credit bureaus.

• This works best when the primary cardholder maintains low balances and a good payment history.

5. Keep Old Credit Cards Open:

Closing cards reduces available credit and shortens your credit history, both of which can hurt your credit.

6. Avoid New Credit Applications:

Each inquiry may drop your score by a few points. Avoid new credit for 3-6 months before applying.

Common Credit Mistakes to Avoid Before Applying ⚠️

• Don't max out credit cards to save cash for a down payment — high utilization can negatively affect your score

• Don't finance furniture before closing — lenders re-check credit before final approval

• Don't close credit cards — the less credit you have available, the more it increases your utilization and shortens your credit history

• Don't co-sign loans — you're 100% responsible if they miss payments, and it can negatively affect your debt-to-income ratio

• Don't ignore small collections — even small amounts can derail approval

• Don't switch jobs before applying — most lenders need 2 years of steady income

How Fincast Maximizes Your Credit Score Advantage 🚀

You worked hard to improve your credit score — now maximize its value. Most borrowers never compare offers.

Here's how Fincast works:

• Apply with one lender — Get pre-approved and receive your Loan Estimate

• Upload your Loan Estimate to Fincast — Share your LE on the secure platform

• Let lenders compete — Vetted lenders may offer competitive terms based on your qualifications

• Choose the right loan — Compare offers and choose the best deal for your situation

No extra credit pulls. No spam. An improved score may help lower your rate or provide better terms, potentially saving you money over the life of your loan.

• Credit requirements, rates, and loan terms vary by lender and profile. This content is for educational purposes only and does not constitute a loan offer or financial advice.

FAQs

1. What credit score do I need to buy a house?

Many lenders require a minimum credit score of 580 for FHA loans (3.5% down), 620 for conventional loans, and 740+ for the best rates, but actual rates and terms vary by lender and borrower profile.

2. How much can improving my score save me?

Every credit point to the good can help you secure more competitive rates and terms (actual offers vary by lender and borrower profile).

3. Will getting pre-approved hurt my score?

It can, as lenders pull your credit, but it usually has a small impact. Multiple mortgage inquiries within 45 days count as one inquiry.

4. How long does credit improvement take?

• Paying down balances 30-60 days

• Fixing errors: 30-90 days

• Building payment history: 3-6 months

5. Do I need perfect credit?

No. Scores of 740+ often get the best rates, but scores of 700-739 may receive competitive terms.

Bottom Line

Your credit score is the gatekeeper to homeownership and determines what you'll pay. Understanding ranges, improving weak spots, and timing strategically may save money over the life of the loan.

You're ready to apply when:

• Your score is 620+ (ideally 700+) with no major red flags

• You have 6+ months of on-time payments

• Credit utilization is under 30% (ideally under 10%)

• You've resolved any credit report errors

• You've avoided new credit inquiries for 3-6 months

If you check these boxes, get pre-approved, and upload your Loan Estimate to Fincast to explore your loan options.

Pro Tips (Save These!)

• Check your credit 3-6 months before applying, not the week before

• Pay down credit cards before statement dates for maximum score impact

• Get all three credit reports — lenders use the middle score of all three

• A 700+ score is often the sweet spot for balancing approval ease with good rates

• Don't make major financial changes during the mortgage process

• Even improving your score by 20-40 points may save thousands in interest

Action Checklist

• Pull all three credit reports from AnnualCreditReport.com

• Check your FICO score (Credit Karma shows VantageScore, which differs)

• Dispute any errors or inaccuracies on your reports

• Pay down credit card balances to below 30% (ideally below 10%)

• Set up autopay for all accounts to ensure on-time payments

• Avoid new credit applications for 3-6 months

• Don't close old credit cards before applying

• Get pre-approved with one lender

• Upload your Loan Estimate to Fincast

• Compare competing offers and choose the best terms

• Start house hunting with the best rate for your credit score!

👉 Mortgage-ready credit? If you already have a Loan Estimate, upload it to Fincast and check whether competing lenders may offer better terms based on it.