Financial
Credit Score
A three-digit number, typically between 300 and 850, that represents your creditworthiness based on your borrowing history. Mortgage lenders use your credit score to determine whether to approve your loan and what interest rate to offer. A score above 740 usually qualifies you for the best rates, while scores below 620 limit your options. Paying bills on time, keeping credit card balances low, and avoiding new credit inquiries before applying will help your score.
Why It Matters
Your credit score is the single biggest factor in determining your mortgage rate. Scores range from 300-850, and lenders use FICO scores (not VantageScore, which is what most free apps show). The difference between a 760+ score and a 660 score can mean 0.5-1.0% higher rate — on a $300,000 loan, that's $100-$200 more per month, or $36,000-$72,000 over 30 years.
Mortgage lenders pull scores from all three bureaus (Equifax, Experian, TransUnion) and typically use the middle score. If your scores are 720, 740, 760 — they use 740. For joint applications, lenders use the lower of the two borrowers' middle scores, so a couple with 760 and 680 gets priced at 680.
Real-World Example
On a $300,000 30-year loan: at 760+ score (6.25% rate): $1,847/mo, $364,820 total interest. At 680 score (6.75% rate): $1,946/mo, $400,406 total interest. At 620 score (7.5% rate): $2,098/mo, $455,173 total interest. The 760 vs 620 gap: $251/month, $90,353 lifetime.
Pro Tip
Check your FICO score (not VantageScore) at least 6 months before applying. Pay down credit cards below 30% utilization, don't open new accounts, and dispute any errors on your reports.