What Does Your Credit Score Actually Need to Be? Clarifying Myths About Mortgage Approvals and Interest Rates

If you’re thinking about buying a home, you’ve probably heard a lot about credit scores. There’s no shortage of advice—and myths—about what your score needs to be to get approved for a mortgage or snag a good interest rate. Let’s clear the air and break down what really matters when it comes to your credit score and home buying.

Myth #1: You Need Perfect Credit to Buy a Home

Many believe you need a score in the 800s to even think about applying for a mortgage. The truth? Most lenders consider a score of 620 as the minimum for conventional loans, and some government-backed loans (like FHA) allow scores as low as 580—or even lower with a larger down payment. While higher is better, you don’t need perfection to get started.

Myth #2: Your Credit Score Is the Only Thing That Matters

While your score is important, lenders also look at your income, debt-to-income ratio, employment history, and savings. A strong application can sometimes offset a less-than-stellar score, especially if you have a solid down payment or low debt.

How Your Score Impacts Your Interest Rate

Here’s where your credit really makes a difference. The higher your score, the lower your interest rate is likely to be. For example, someone with a score above 740 will typically qualify for the best rates, while a score in the low 600s may mean a higher rate (and higher monthly payments). Even a small bump in your score can save you thousands over the life of your loan.

Tips to Boost Your Score Before You Apply

• Pay bills on time—payment history is key!
• Keep credit card balances low relative to your limits.
• Avoid opening new credit accounts right before applying for a mortgage.
• Check your credit report for errors and dispute anything that isn’t accurate.

The Bottom Line

You don’t need a flawless credit score to buy a home, but the higher your score, the better your options. Focus on building healthy financial habits, and don’t let myths hold you back from exploring your homeownership dreams. If you have questions about your credit or want to see what you might qualify for, let’s chat and make a plan together!