💰 How Your Credit Score Affects Your Rate
Your credit score directly impacts your interest rate. Here's what you can expect in 2026:
| Credit Score | Expected Rate* | Monthly Payment** | Total Interest |
|---|---|---|---|
| 760-850 (Excellent) | 5.5% | $2,271 | $417,560 |
| 700-759 (Good) | 5.75% | $2,334 | $440,240 |
| 680-699 (Fair) | 6.0% | $2,398 | $463,280 |
| 660-679 | 6.25% | $2,463 | $486,680 |
| 640-659 | 6.5% | $2,528 | $510,080 |
| 620-639 | 6.75% | $2,594 | $533,840 |
| 580-619 (FHA only) | 7.0%+ | $2,661+ | $557,960+ |
*Estimated rates for 2026. **Based on $400,000 loan, 30-year fixed.
💵 The Cost of a Low Credit Score
The difference between a 760 score and a 620 score on a $400K loan:
Monthly Difference
$323/mo
Yearly Difference
$3,876/yr
30-Year Difference
$116,280
📋 Credit Requirements by Loan Type
🏛️ FHA Loans
Requirements:
- • 580+ = 3.5% down payment
- • 500-579 = 10% down payment
- • Most lenient credit requirements
- • Allows recent credit issues
Best For:
- • First-time buyers
- • Lower credit scores
- • Small down payments
- • Rebuilding credit
🏠 Conventional Loans
Requirements:
- • 620 minimum (most lenders)
- • 740+ for best rates
- • 3-20% down payment
- • PMI required if <20% down
Best For:
- • Good credit (700+)
- • 20% down (no PMI)
- • Avoiding FHA MIP
- • Higher loan amounts
🎖️ VA Loans
Requirements:
- • No VA minimum
- • Most lenders want 620+
- • Some accept 580+
- • 0% down payment!
Best For:
- • Veterans & active military
- • No down payment
- • No PMI ever
- • Best rates available
🌾 USDA Loans
Requirements:
- • 640 for automatic approval
- • Lower scores need manual review
- • 0% down payment
- • Income limits apply
Best For:
- • Rural/suburban buyers
- • Low-moderate income
- • No down payment
- • Low mortgage insurance
📈 How to Improve Your Credit Score Fast
1. Pay Down Credit Card Balances
+50 ptsKeep utilization under 30% (ideally under 10%). This is the fastest way to boost your score. Paying down a maxed card can add 50+ points in 30 days.
2. Dispute Errors on Your Report
+20-100 ptsCheck all 3 bureaus (Equifax, Experian, TransUnion) for errors. Dispute anything incorrect— wrong balances, accounts that aren't yours, or late payments you made on time.
3. Become an Authorized User
+30 ptsAsk a family member with excellent credit to add you as an authorized user on their oldest, lowest-utilization card. Their history becomes yours.
4. Don't Close Old Accounts
Protect ScoreLength of credit history matters. Keep old accounts open, even if you don't use them. Closing them can hurt your score.
5. Avoid New Credit Applications
Avoid -5 pts eachEach hard inquiry drops your score 5-10 points. Don't open new credit cards or finance anything before applying for a mortgage.
🤔 What If My Credit Score Is Too Low?
If You're 580-619:
- ✓ FHA loan with 3.5% down
- ✓ Some VA lenders will work with you
- ✓ Expect higher rates (7%+)
- ✓ Consider improving score first
If You're Below 580:
- ✓ FHA with 10% down (500-579)
- ✓ Non-QM lenders (higher rates)
- ✓ Rent-to-own programs
- ✓ Focus on credit repair first
💡 Pro Tip: Wait 3-6 Months If Possible
If your score is close to a threshold (like 615 when you need 620), spending 3-6 months improving your credit can save you tens of thousands in interest over the life of your loan.
❓ Credit Score FAQ
Which credit score do mortgage lenders use?
Lenders pull all 3 bureaus (Equifax, Experian, TransUnion) and use the middle score. If you have scores of 680, 700, and 720, they'll use 700. For joint applications, they use the lower of the two middle scores.
Does checking my credit hurt my score?
Checking your own credit (soft inquiry) does NOT hurt your score. When lenders check (hard inquiry), it drops 5-10 points. Multiple mortgage inquiries within 14-45 days count as one inquiry.
How fast can I improve my credit score?
You can see improvements in 30-60 days by paying down credit cards and disputing errors. Significant improvement (50+ points) typically takes 3-6 months of consistent effort.
Can I get a mortgage with no credit history?
Yes, through "manual underwriting." You'll need to show alternative credit history like rent payments, utilities, and insurance payments. FHA and some conventional lenders offer this.
🏠 Ready to See What You Qualify For?
Your credit score is just one factor. Get pre-approved to see your actual rate and loan options based on your complete financial picture.