When applying for a mortgage, your credit score is one of the most important factors lenders consider. It not only affects whether you qualify for a loan but also the interest rate and terms you receive. Understanding how credit scores work can help you prepare for the homebuying process and improve your chances of approval.
What is a Credit Score?
Your credit score is a three-digit number that reflects your creditworthiness. It’s based on your payment history, credit utilization, length of credit history, types of credit, and recent inquiries. Most lenders use the FICO® score, which ranges from 300 to 850.
Why Do Credit Scores Matter for Mortgages?
Lenders view your credit score as a measure of risk. A higher score suggests you’re more likely to repay your loan on time, which can lead to:
- Easier loan approval
- Lower interest rates
- Access to more loan options (Conventional, FHA, VA, etc.)
Lower scores don’t necessarily mean you can’t get a mortgage, but they may limit your options or increase your costs.
Typical Credit Score Ranges for Mortgages
- 740 and above: Excellent – often qualifies for the best rates
- 700–739: Good – competitive rates
- 660–699: Fair – may qualify but with slightly higher rates
- 620–659: Minimum for many Conventional loans
- 580–619: May qualify for FHA loans with higher costs
- Below 580: Difficult to qualify without significant compensating factors
How to Improve Your Credit Score Before Applying
- Pay bills on time – Payment history is the biggest factor.
- Lower your credit card balances – Aim for 30% or less utilization.
- Avoid opening new credit lines before applying for a mortgage.
- Check your credit report – Dispute errors that may lower your score.
- Build credit history – Keep older accounts open and active when possible.
Final Thoughts
Your credit score plays a central role in the mortgage approval process. The higher your score, the better your chances of securing favorable terms and saving money over the life of your loan.
At The Tuttle Group, we help Dallas buyers understand how their credit impacts mortgage options and provide guidance on improving scores before applying. Contact us today to start your homeownership journey with confidence.
