Understanding Your Credit Score

How Credit Scores Work

Most mortgage lenders use FICO scores — specifically the versions developed for mortgage lending (FICO Score 2, 4, and 5 from the three major bureaus: Experian, TransUnion, and Equifax). When you apply for a mortgage, your lender pulls all three scores and typically uses the middle score for qualification purposes. If two borrowers are on the loan, the lower of the two middle scores is generally used.

FICO scores range from 300 to 850 and are calculated based on five categories of information in your credit report. Each category carries a different weight in the overall calculation:

• Payment History (35%) — Whether you have paid past credit accounts on time. This is the single largest factor.
• Amounts Owed (30%) — How much of your available credit you are using, also called credit utilization. Lower is better.
• Length of Credit History (15%) — How long your accounts have been open. Longer histories generally help your score.
• Credit Mix (10%) — Having a variety of account types (credit cards, installment loans, mortgage) can help.
• New Credit (10%) — Recent credit inquiries and newly opened accounts. Too many in a short period can lower your score.

What Score Ranges Mean for Mortgage Qualification

Different loan programs have different minimum credit score requirements. Here is a general overview of how score ranges typically align with mortgage options:

Note: These are general guidelines. Actual qualification depends on the complete financial picture including income, assets, and debt ratios. Rates vary based on market conditions and individual circumstances.

Wondering which loan program fits your credit profile? Compare FHA vs. Conventional loans to understand the differences.

How to Check Your Credit Score

You are entitled to one free credit report from each bureau every year through AnnualCreditReport.com — the only federally authorized source. Many banks and credit card companies also provide free FICO score access through their apps or online banking portals.

Keep in mind that the score you see from free consumer services may differ from the mortgage-specific FICO scores your lender pulls. Consumer scores (like VantageScore or FICO 8) use different models than the mortgage-specific versions. Your lender score could be 10–40 points different from what you see online.

When you are ready to apply, your loan officer will pull a tri-merge credit report that shows all three bureau scores. This hard inquiry may temporarily lower your score by a few points, but multiple mortgage inquiries within a 14–45 day window (depending on the scoring model) count as a single inquiry for scoring purposes.

How to Improve Your Score Before Applying

If your score is not where you want it to be, the good news is that credit scores are dynamic and can improve with consistent effort. Here are the most effective strategies:

• Pay down credit card balances — Aim to get utilization below 30%, ideally below 10%. This can improve your score within one to two billing cycles.
• Make all payments on time — Set up autopay for at least the minimum payment on every account. Even one 30-day late payment can drop your score significantly.
• Do not close old accounts — Closing a credit card reduces your available credit and shortens your average account age, both of which can hurt your score.
• Dispute errors on your report — Review all three reports for inaccuracies. Incorrect late payments, wrong balances, or accounts that are not yours can be disputed and removed.
• Avoid new credit applications — In the months before applying for a mortgage, avoid opening new credit cards, auto loans, or other credit accounts.

How long do negative items last? Most negative items (late payments, collections, charge-offs) remain on your credit report for seven years from the date of the original delinquency. Bankruptcies can remain for seven to ten years. However, the impact of negative items diminishes over time — a two-year-old late payment hurts much less than a recent one.