Your credit score is the single biggest factor in determining your mortgage interest rate. A 100-point difference in score translates to tens of thousands of dollars in interest over a 30-year loan. Understanding how scoring works — and how to improve it — is one of the highest-ROI activities a prospective buyer can undertake.
Rate Impact by Credit Score Tier
| FICO Score | 30-Year Rate (Approx.) | Monthly Payment ($350K loan) | Total Interest Paid |
|---|---|---|---|
| 760–850 | 6.75% | $2,270 | $467,200 |
| 700–759 | 6.97% | $2,321 | $485,560 |
| 680–699 | 7.15% | $2,360 | $499,600 |
| 660–679 | 7.37% | $2,411 | $517,960 |
| 640–659 | 7.82% | $2,520 | $557,200 |
| 620–639 | 8.38% | $2,655 | $605,800 |
What Determines Your Credit Score?
| Factor | Weight | What It Measures |
|---|---|---|
| Payment history | 35% | On-time vs. late payments — most critical factor |
| Credit utilization | 30% | Balances vs. limits — keep under 30%, ideally under 10% |
| Credit age | 15% | Average age of accounts — keep old accounts open |
| Credit mix | 10% | Variety of account types (credit cards, loans) |
| New inquiries | 10% | Recent applications for credit |
How to Raise Your Score Before Applying
- Pay down credit card balances to below 30% utilization (ideally below 10%).
- Dispute any errors on your credit report — errors affect 1 in 5 Americans.
- Pay every bill on time for at least 12 months before applying.
- Don't open new credit accounts within 6 months of applying.
- Don't close old accounts (they increase average account age).
- Ask your card issuer to increase your credit limit (without increasing spending).
- Consider a rapid rescore — your lender can submit evidence of recent improvements and update your score in days.
Credit Timeline
Improving your credit from 640 to 720 typically takes 6–18 months of consistent positive behavior. Start working on your credit 12–24 months before you plan to buy.