Credit & Mortgage Qualification

Your Credit Score and Your Mortgage: What You Need to Know

Your credit score is one of the biggest factors in mortgage approval. It determines whether you'll qualify, what loan types you can use, and what rate you'll pay. Let's break down how it works and what you can do about it.

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580+
Minimum FHA credit score
620+
Minimum conventional score
20 pts
Can improve your rate significantly
1
Hard pull at pre-approval (not during search)
The Impact of Your Score

Why Your Credit Score Matters So Much

Your credit score is more than a number. It's the deciding factor in whether you'll qualify for a mortgage at all, and if you do qualify, it'll affect almost everything about your loan.

It determines if you'll qualify. Lenders have minimum credit score requirements for each loan type. If you're below the minimum, you won't get approved, period. There's no workaround.

It limits your loan type options. An FHA loan might accept a 580 credit score, but a conventional loan won't go below 620. That changes what down payment you'll need and what mortgage insurance you'll pay.

It controls your interest rate. A buyer with a 640 credit score and a buyer with a 720 score might get approved for the same loan amount, but they won't get the same rate. That 80-point difference can mean $100 to $200 more per month on a $350,000 loan. Over the life of the loan, that's tens of thousands of dollars.

It affects your monthly payment. Higher credit scores get better rates, which means lower monthly payments. It's that simple.

Learn more about how mortgage approval works from start to finish

How credit scores affect mortgage interest rates and monthly payments
How Credit Scores Work

The 5 Factors That Make Up Your Credit Score

Your credit score isn't random. It's calculated based on five specific factors. Here's what matters most, and why.

01
Payment History
35% of your score. On-time payments are the single biggest factor in your credit score. One late payment can hurt you for years. Set up autopay for at least the minimum to protect this.
02
Credit Utilization
30% of your score. How much of your available credit you're actually using. If you have a $10,000 limit and $9,000 balance, that's 90%. Keep it under 30% for the best score.
03
Length of History
15% of your score. How long you've had credit accounts open. Longer is better. This is why we tell clients not to close old credit cards, even if they don't use them.
04
Credit Mix
10% of your score. Having different types of credit is good. Credit cards, auto loans, student loans, mortgages. Mix matters because it shows you can handle different kinds of debt responsibly.
05
New Credit
10% of your score. Recent hard inquiries and new accounts can lower your score slightly. Don't open new accounts right before you apply for a mortgage.
Loan Type Requirements

Minimum Credit Scores by Loan Type

Different loan types have different credit score requirements. Here's what you need to know.

FHA Loans
Minimum 580 for 3.5% down. If your score is 500-579, you'll need 10% down. Great for first-time buyers and anyone with credit challenges.
Conventional Loans
Minimum 620 to get approved. Scores of 740+ qualify for the best rates. Lower scores mean higher rates and mortgage insurance.
VA Loans
No official VA minimum. Most lenders want 580-620. If you're a veteran, this is often your cheapest option regardless of credit score.
USDA Loans
Typically 640+ for rural and suburban Florida properties. Zero down if you qualify for the program. Credit score matters less than debt-to-income ratio.
Jumbo Loans
Usually 700+ minimum, often 720+. For loan amounts over the conventional limit. Higher credit score is more important than on other loan types.
DSCR / Investor Loans
Typically 680+ minimum. For real estate investors and LLCs. Score matters, but cash flow and property quality matter more.
The Timeline

Credit Checks During the Homebuying Process

You'll have credit checks at different stages. Here's what to expect and why.

Timeline of soft pulls and hard pulls during mortgage pre-approval and home buying

Pre-qualification (soft pull): When you first talk to a lender, they might do a soft pull. This doesn't affect your credit score. It's just an estimate to see where you might stand.

Pre-approval (hard pull): Once you're ready to move forward, the lender runs a hard pull. This is a full credit check. It does show on your credit report and costs a few points temporarily.

During home search: No credit checks. You can look at as many homes as you want without your credit being touched.

Before closing (soft pull): A few days before closing, your lender might do another soft pull to make sure nothing changed. This doesn't hurt your score.

Important note: If you get multiple hard pulls for a mortgage within 45 days, they count as one inquiry. Don't be afraid to shop for rates. You won't be penalized as long as you do it within that window.

See the full mortgage approval timeline from start to finish

Build Your Score

Steps to Improve Your Credit Before Applying

Credit improvement doesn't happen overnight, but these steps work. Most buyers see measurable improvement within 3 to 6 months.

01
Pay Every Bill On Time
Set up autopay for at least the minimum on every account. Late payments hurt your score for 7 years. On-time payments are the fastest way to build credit.
02
Pay Down Balances
Get your credit card balances below 30% of your limits. If you have a $5,000 limit, keep the balance under $1,500. This single step helps many buyers improve their score quickly.
03
Don't Open New Accounts
Avoid new credit for 6 to 12 months before you apply for a mortgage. Each new account triggers a hard pull and lowers your average account age, both of which hurt your score.
04
Keep Old Accounts Open
Don't close old credit cards, even if you don't use them. Your credit history length matters. Closing accounts shortens your history and raises your utilization ratio.
05
Dispute Any Errors
You get one free credit report per year at AnnualCreditReport.com. Check for errors. If you find any, dispute them in writing. Errors should be removed within 30 to 45 days.

Most buyers who follow these steps see improvement within 3 to 6 months. Don't wait for perfect. Most lenders want to move forward once you're in a qualifying range.

Know Where Your Credit Stands Before You Look at Homes

A pre-approval tells you your real credit threshold, what loan you qualify for, and how much you can actually afford. It takes a few minutes and it's the best first step.

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Jordan Vreeland, Licensed Mortgage Broker