You’ve heard it a million times: your credit score matters. But when you’re buying a home—or refinancing one—it’s extra important. It can change which mortgage you qualify for, how much you pay every month, and how much “extra” you pay over the life of the loan.

Let’s break it down in plain English.

1. What even is a credit score?

• Think of your credit score as a “trust score” lenders use to figure out how likely you are to pay back borrowed money.
• In the U.S., credit scores typically range from 300 to 850. The higher, the better. That’s because a higher score suggests you’re lower risk to lenders.
• It’s calculated using a few key factors:
  • Payment history (~35%)
  • How much you owe (relative to your limits) (~30%)
  • Length of credit history (~15%)
  • New credit inquiries (~10%)
  • Mix of credit types (credit cards, installment loans, etc.) (~10%)

2. Why lenders care so much about it

When you apply for a mortgage, lenders look at your credit score to decide:

• Eligibility: Can you get a loan at all (for a given program)?
• Interest rate: Better scores = lower rates.
• Down payment / loan-to-value (LTV): With higher scores, you might qualify with a smaller down payment or higher LTV.
• Mortgage insurance & fees: Lower-credit borrowers often pay more in mortgage insurance or extra fees.
• Loan terms or restrictions: Some loan programs have stricter rules for lower scores.

Even a modest drop in score can add tens of thousands of dollars in interest over 30 years. For example: a $400,000 mortgage at 3.75% versus a 5.25% rate could amount to a difference of approximately $130,000 in interest over the life of the loan.

3. Credit score “tiers” — what qualifies where?

Lenders often slot scores into “tiers,” and your tier can determine what loan options and rates you’re eligible for. While every lender is different, a typical breakdown looks like this:

Tier	Score Range	What You Can Expect
Excellent	~760–850	Best rates, low fees, flexible terms, high LTVs
Very Good	~700–759	Still strong options, slightly higher rates
Good	~660–699	Standard mortgage products, but higher rates
Fair	~620–659	Eligible for many conventional or government-backed programs, but rates and restrictions bite
Poor / Sub-620	Below ~620	Fewer options, often higher-risk loans, more fees

For conventional loans, many lenders require a minimum around 620. FHA loans are more lenient — they sometimes allow as low as 580 (with a 3.5% down payment). Government programs like VA or USDA may also give more flexibility (if you meet their other criteria).

4. What lower credit scores mean in practice

If your credit score is on the lower side, here’s how your mortgage options might be affected:

• Higher interest rates → your monthly payment goes up
• Higher mortgage insurance or fees → more “hidden” cost
• Lower maximum LTV → you might have to put more money down
• More restrictive terms → shorter terms, less flexibility
• Fewer loan program choices → maybe you only qualify for government or non-QM (non-qualified mortgage) products with higher risk

In cases of marginal credit, some borrowers turn to non-QM loans or private lending. These options can “fill the gap,” but they usually come with higher rates and shorter terms.

5. How to boost your credit score before applying

If you’ve got time before you need to submit your mortgage application, here are action steps:

• Get your credit reports and check for errors (you’re allowed a free report from each of the three credit bureaus once per year).
• Dispute incorrect items (late payments that aren’t yours, erroneous balances, etc.).
• Pay down credit card debt / revolving balances — especially bringing down high‐balance cards.
• Avoid opening new accounts or making big credit inquiries in the months before applying.
• Keep older accounts open (even if rarely used) — they help your credit age.
• Make all payments on time (medical bills, utilities, everything).

If you can push your score even 20–50 points, it might open up substantially better loan options.

6. How we help at MORTGAGEinc

At MORTGAGEinc, we believe in empowering borrowers with knowledge so they’re not caught off guard by rates or rejections. When working with borrowers:

• We pre-qualify and preemptively review credit
• We educate clients on credit scoring mechanics and simple “win moves.”
• We flag risks early and help borrowers prepare backup plans or consider alternative programs.
• When a borrower’s score doesn’t hit “perfect,” we explore creative solutions (but always within safe, compliant boundaries).

7. Bottom line & takeaway

• Your credit score isn’t just a two-digit number — it’s one of the biggest determinants of how “good” your mortgage will be.
• Higher scores = lower interest, more flexibility, fewer fees. Lower scores = limited choices and higher costs.
• But you can do something about it before applying. A few months of smart credit work can move you from “barely qualifying” to “in a strong position.”