Your credit score might be the single most important number in your mortgage application. A difference of just 100 points on your credit score can mean tens of thousands of dollars over the life of your loan. Here's exactly how lenders use your score — and how to maximize yours before applying.
Credit Score Ranges and Mortgage Rates
Lenders group borrowers into credit tiers. Each tier gets a different interest rate. The difference seems small on paper but compounds dramatically over 30 years.
| Credit Score | Rating | Est. Rate* | Monthly Payment** | Total Interest** |
|---|---|---|---|---|
| 760–850 | Exceptional | 6.8% | $1,960 | $305,900 |
| 720–759 | Very Good | 7.0% | $1,996 | $318,500 |
| 680–719 | Good | 7.3% | $2,052 | $338,600 |
| 640–679 | Fair | 7.8% | $2,147 | $372,800 |
| 580–639 | Poor | 8.6% | $2,307 | $430,500 |
*Estimated rates as of 2025. **Based on $300,000 loan, 30-year term. Rates vary by lender.
The 5 Factors That Make Up Your Credit Score
- Payment History (35%): The most important factor. One missed payment can drop your score 50–100 points.
- Credit Utilization (30%): The percentage of your available credit you're using. Keep it under 30%, ideally under 10%.
- Length of Credit History (15%): Older accounts help. Don't close old credit cards.
- Credit Mix (10%): Having different types of credit (cards, auto loan, student loans) helps slightly.
- New Credit (10%): Recent hard inquiries temporarily lower your score. Avoid opening new accounts in the 6 months before applying for a mortgage.
How to Improve Your Score Before Applying
If you have 6–12 months before you plan to buy, these strategies can meaningfully boost your score:
- Pay down credit card balances to under 10% utilization on each card
- Set up autopay for all bills to ensure no missed payments
- Dispute errors on your credit report — 1 in 5 reports contain mistakes
- Become an authorized user on a family member's old, well-managed account
- Don't close old accounts — even cards you don't use help your average account age
- Avoid new credit applications for at least 6 months before applying
What Lenders Actually Look At
Most mortgage lenders use the middle of your three FICO scores (from Equifax, Experian, and TransUnion). If you're applying jointly with a spouse, lenders typically use the lower of the two middle scores. This matters — one partner's lower score can affect your rate.
Lenders also look beyond the score itself at the full credit report: the types of delinquencies, how recent they are, and patterns in your credit behavior.
How Long Negative Items Stay on Your Report
- Late payments: 7 years
- Collections: 7 years
- Bankruptcy (Chapter 7): 10 years
- Bankruptcy (Chapter 13): 7 years
- Hard inquiries: 2 years (impact fades after 1 year)
Even with negative items, scores can recover significantly with consistent positive behavior over 12–24 months.