How credit affects your mortgage
What score you need, what the score actually changes, which items are worth fixing before you apply, and what to leave alone.
Credit does three things in a mortgage file: it decides whether you qualify, it prices your rate, and on conventional loans it prices your mortgage insurance. The second and third are where the money is.
The scores lenders actually use
Not the one in your banking app. Mortgage lenders pull all three bureaus using older FICO models built for mortgage lending, and use the middle score of the three. With two borrowers, the lower of the two middle scores generally governs. It is common for the mortgage score to land below the free score you have been watching, so treat any consumer app number as a rough signal.
Rough qualifying floors
| Program | Typical floor | Notes |
|---|---|---|
| Conventional | ~620 | Score also drives PMI cost — the difference is large |
| FHA | ~580 at 3.5% down | Lower scores may be possible with 10% down |
| VA | No statutory minimum | Lender-set in practice; residual income test matters |
| USDA | ~640 typical | Below that generally needs manual underwriting |
| Jumbo | 700+ typical | Reserves and documentation requirements are stricter |
Program minimums. Individual lender overlays can be higher, and score is never the only test.
What moves a score fastest
Utilization. The ratio of your revolving balances to your limits is the fastest-moving major input, and it updates as each creditor reports. Paying a card from 90% down to under 30% can show up within a cycle. Nothing else legitimate moves a score in weeks.
- Pay down revolving balances, starting with the cards closest to their limits rather than the largest balance.
- Correct genuine errors — wrong balances, accounts that are not yours, a paid collection still reporting as open. Dispute those with documentation.
- Get and stay current on everything. Payment history is the largest factor and late payments hurt for years.
- Keep old accounts open. Length of history helps you, and closing a card raises your utilization.
What not to do
- Do not close credit cards to "clean up" your report before applying. It reliably backfires.
- Do not pay off an old collection without asking first — on some programs and in some situations it changes nothing and in others it resets recency. Ask before you send money.
- Do not open new accounts, including store cards at checkout, or take a "credit builder" loan mid-process.
- Do not pay a credit repair company to dispute accurate information. It does not work and the good versions of what they do you can do yourself.
Derogatory events and waiting periods
A bankruptcy, foreclosure or short sale in your past does not disqualify you permanently. Each program has a waiting period measured from the discharge or completion date rather than the filing date, and government programs are generally shorter than conventional. If you are close to a date, that timing alone can change which programs are open to you — worth checking before you assume.
The practical order of operations
Pull your reports, read them, then let a lender pull the real mortgage scores. From there the useful conversation is specific: which two balances to pay down, in what order, and what that should be worth. That is a fifteen-minute conversation and it is often worth thousands over the life of the loan.
Written by
Travis Nicolaysen
Loan Officer, Fairway Home Mortgage · NMLS #1782820
Questions about how this applies to your file? Call or text 704-728-4548.
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