How Credit Scores Shape Your Mortgage Rate — and What You Can Do About It

Your credit score is one of the single largest drivers of your mortgage rate. The difference between a 760 FICO and a 640 FICO on the same loan can easily translate to more than 0.75% in rate — and tens of thousands of dollars in interest over 30 years.

Lenders typically think in score tiers, with pricing improving at each step:

• 740 and above: best pricing on most conventional loans
• 700–739: strong pricing, with most options open
• 660–699: approvable, but rate adjustments begin to apply
• 620–659: conventional lending narrows; FHA may be a better path
• Below 620: options focus on government-backed programs

If you’re preparing to apply, a few levers move scores relatively quickly:

1. Pay down revolving balances to get credit utilization below 30% (and ideally below 10%)
2. Avoid new credit inquiries and new accounts in the months before applying
3. Keep older credit accounts open to preserve your average account age
4. Dispute errors on your credit report — mistakes are more common than people realize

A month or two of focused credit work before an application can change the rate you’re offered for the entire life of the loan. Few financial moves pay back at that ratio.