Credit score and mortgage rates: what lenders look at

What a credit score is

The CFPB describes a credit score as “a prediction of your credit behavior,” based on your credit reports. It estimates how likely you are to repay a loan on time. Most scores range from 300 to 850, and companies calculate them with a scoring model.

For mortgages, the CFPB says higher scores reflect a better credit history and make you eligible for lower interest rates. Most mortgage lenders use FICO scores and look at all three major credit reporting companies. Your score is “only one component” of the lender’s decision. The lender also weighs your credit history with that lender, your existing debt, savings, total assets and current income.

Which score does the lender use?

The three nationwide credit bureaus can report different numbers, so a lender must pick one. The CFPB says lenders typically use the middle of the three. Fannie Mae’s Selling Guide sets this rule for loans it buys (B3-5.1-02):

• Two scores for a borrower: use the lower.
• Three scores: use the middle one.
• More than one borrower: the guide selects the lowest applicable score from the group as the loan’s representative score. A borrower without a score is left out, and the other borrowers’ scores are used.

Example. Your scores are 702, 718 and 735. The representative score is 718. If your spouse’s middle score is 684 and you apply together, the loan’s representative score under Fannie Mae’s rule is 684, the lowest of the group. Applying alone, or with a co-borrower whose score is higher, can change the outcome.

Minimum scores

Fannie Mae’s guide (B3-5.1-01, revised April 22, 2026) says:

For manual loans, the guide says requirements depend on the score, the highest loan-to-value ratio, loan purpose, number of units, amortization type and debt-to-income ratio, and are published in its Eligibility Matrix. A freeze at one repository is acceptable if the lender gets a three-in-file merged report. If your credit is frozen, lift the freeze with the bureaus before you apply.

Freddie Mac and the government programs set their own rules. See FHA loans, VA loans, USDA loans and conventional loans. A lender can also set stricter limits than any investor.

How much your score can change your cost

The CFPB’s Explore Interest Rates tool shows the effect. Its example is a $400,000 home with 10 percent down and a 30-year fixed conventional loan, using rate data from April 1, 2025. With a 625 score, offers range from 6.125 to 8.875 percent and the highest total interest over 30 years is $671,156. With a 700 score, offers range from 5.875 to 8.125 percent and the lowest total interest is $406,633. The CFPB says that a higher score “saves you up to $264,523 over the life of the loan.” That compares the most expensive 625 offer with the cheapest 700 offer, so it is a best-case against worst-case gap, and today’s rates will differ. The point is the direction: a higher score generally means a more affordable loan and more lenders to choose from.

Score also affects mortgage insurance. The CFPB says conventional private mortgage insurance rates depend on your down payment and credit score, while FHA mortgage insurance “costs the same no matter your credit score.” To see how the rate itself is built, read how mortgage rates are set.

Check and improve your credit before you apply

1. Get your reports. Federal law entitles you to a free report from each nationwide bureau every 12 months, and the bureaus let you check each one weekly for free at AnnualCreditReport.com, the only site the Federal Trade Commission names for this (FTC). Free annual reports are not described as including scores.
2. Fix errors early. Review your reports well before you apply and dispute anything wrong, because the report feeds your score and your score affects your rate.
3. Avoid new credit. The CFPB advises against applying for a lot of new credit in a short time, especially while getting ready for a mortgage.
4. Compare Loan Estimates. The CFPB says the interest rate is not the only cost of a mortgage and tells you to compare Loan Estimates to find the best deal. Start with a preapproval.

Your score is only one test. The lender also checks your debt-to-income ratio and your down payment.

Where states differ

Credit-score rules for conventional loans come from federal investors and agencies, so they do not change from state to state. State housing finance agencies may add their own program requirements for first-time buyer loans. See first-time buyer programs in Texas or in California.