How Does Your Credit Score Affect Your Mortgage Rate?
, by Rob Kaufman
When creditors are considering whether or not to provide you with a mortgage loan (and what interest rate to charge you), one of the first items they review is your credit score. Typically, the higher your credit score, the lower the interest rate the lender will charge you.
What does this mean? Well, if you've decided you want to take out a mortgage or refinance, it's a good idea to first check your credit scores (and your credit reports) from all three major credit bureaus. Knowing where you stand, as far as your credit goes, will help you get the credit you deserve. And, if your score is not as high as you'd like it to be, you can start working on raising it before starting your mortgage search.
How much does your credit score affect your mortgage rate?
Lenders use credit scores to assess the risk of lending: A higher credit score typically indicates a lower risk so lenders are more confident that the borrower will repay the debt, while a lower score typically reflects the opposite. Because of this, those with higher credit scores are often offered lower interest rates and better loan terms than those with low credit scores.
Mortgage rates by credit score range
To get insight into what your mortgage interest rate could be based on credit score, you can use this myFICO calculator. However, we've made it even easier for you to see and understand the numbers by with the chart below (based on national rate averages for a 30-year fixed loan of $250,000 as of 8/19/2025).
| FICO score | APR | Monthly payment | Total interest paid |
| 760-850 | 6.924% | $1,654 | $345,271 |
| 700-759 | 7.227% | $1,702 | $362,554 |
| 680-699 | 7.331% | $1,719 | $368,912 |
| 660-679 | 7.404% | $1,732 | $373,387 |
| 640-659 | 7.56% | $1,758 | $382,995 |
| 620-639 | 7.934% | $1,823 | $406,251 |
Although the difference in monthly payments is "only" $169 (please note, that the word "only" is in quotes) between the highest and lowest credit score tiers, the total interest paid differs by $60,980! That's a lot of extra interest to pay because of a low credit score.
How and when credit scores start affecting your loan
Credit scores at 800 or above are considered "exceptional" and will help you obtain the lowest interest rate and best terms on a mortgage. Typically, the lower your score moves down the scale, the higher your interest rate becomes - especially when you start entering the mid-to-low 600's.
Many lenders use a process called, "loan-level pricing". It basically works like this: the credit score scale is sliced up into 20-point increments. A borrower's rate adjusts with each 20 point move up or down the scale. So, every time a borrower's score doesn't go down a "level", there's an increase in cost... and vice-versa.
Loans available for borrowers with lower credit scores
For borrowers who have a credit score toward the lower end of the spectrum, there are still some loans that might be available to them. Most of these loans have specific terms and requirements (doing research is crucial for these loans), that include:
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FHA Loans guaranteed by the Federal Housing Administration for borrowers with "less than ideal" credit
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VA Loans are offered to active and veteran military personnel and their families.
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USDA Loans are for low-to-moderate income borrowers purchasing in a rural area.
Tips to help increase your credit score
If your current score isn’t where you’d like it to be, don’t worry—there are actionable steps to take. Here are some strategies that may help your credit score:
- Pay every single bill on time Because your payment history accounts for 35% of your credit score, doing this can significantly help your credit score. Set up autopay or reminders to ensure you never miss a due date.
- Pay down credit card balances High credit card balances can increase your credit utilization ratio, a key factor in your credit score. Aim to keep utilization below 30% of your credit limit—ideally below 10%, if possible.
- Dispute and fix and errors on your credit report(s) Request a free copy of your credit report from AnnualCreditReport.com and review it for inaccuracies. Dispute any errors with the credit bureaus to correct them.
- Don't close credit accounts Doing so may hurt your credit utilization ratio, which could have a negative impact on your score.
- Don't open any new lines of credit or take out large loans Each hard inquiry for new credit can lower your score. Unless absolutely necessary, hold off on opening new accounts before applying for a mortgage.
FAQs on how your credit score can affect your mortgage rate
What credit score do I need to get the best mortgage rate?
To qualify for the best mortgage rates, lenders typically look for borrowers with strong credit histories. While each lender may have slightly different criteria, having a well-established record of responsible credit use can put you in a favorable position. The stronger your FICO Score, the more likely you are to be offered the most competitive rates available.
Does my credit score impact the type of mortgage I qualify for?
Yes, your credit score can influence not only your mortgage rate but also the types of loans you qualify for. Conventional loans usually require a credit score of at least 620, while FHA loans can be more lenient with some lenders approving scores as low as 500 (though a higher down payment may be required). For VA or USDA loans, credit score requirements vary by lender but are often more flexible.
How long does it take to improve my credit score before applying for a mortgage?
The time needed to improve your credit score depends on your current financial situation and the strategies you use. Paying down high credit card balances or disputing errors on your credit report could yield noticeable results in a short period. Establishing a pattern of on-time payments and reducing debt takes a bit longer but can significantly boost your score. Building or repairing credit history, such as missed payments or derogatory marks, requires consistent effort over time.
See how other myFICO customers manage their credit score while trying to find a mortgage. Visit the myFICO forum and see their experiences... and don't forget to share your own!
Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.