How Your Credit Score Affects Your Mortgage Rate
Credit score is one of the biggest levers in what mortgage rate gets offered. Lenders group applicants into pricing tiers, and moving from one tier to the next — even by a small margin — can change the rate meaningfully over the life of a loan. Why lenders price by credit tier Mortgage pricing is risk-based. Statistically, lower credit scores correlate with higher default risk, so lenders charge more (a higher rate) to offset that risk. Pricing tiers vary by lender and loan program, but score bands are typically set in ranges — for example, everyone from 760-850 gets one pricing tier, 740-759 gets a slightly higher rate tier, and so on down the scale, with the gaps widening more the lower the score falls, especially below the mid-600s. This means someone doesn't need "perfect" credit to get a good rate — they need to be above the next tier threshold, which is a more achievable target. Loan type changes the minimum Conventional loans generally require higher mini...