What Your Credit Score Means
Your credit score is a three?digit number, typically between 300 and 850, that reflects how responsibly you’ve managed credit in the past. It’s based on factors like payment history, credit utilization, types of credit, and the length of your credit history.
Higher scores signal to lenders that you’re a reliable borrower. Lower scores indicate you may be a higher risk—which affects the interest rate you’ll receive.
Why Credit Scores Affect Mortgage Rates
Mortgage lenders use your credit score to predict how likely you are to repay the loan. The better your score, the less risky you appear—and that usually means a lower interest rate.
Here’s why that matters:
- Lower rates save you money every month.
- Over the life of a mortgage, the savings can reach tens of thousands of dollars.
- Higher scores give you access to more loan options.
Typical Credit Score Ranges for Mortgage Rates
While every lender is different, here’s a general idea of how scores may influence rates:
- 760 and above: Excellent – eligible for the lowest available rates
- 700–759: Very good – competitive rates
- 680–699: Good – slightly higher rates
- 620–679: Fair – higher rates; still eligible for many programs
- Below 620: Challenging – may require specialized loan options
Remember, at our credit union, we work with members individually to help them understand their options—even if their credit isn’t perfect.
How Much Can Your Credit Score Affect Monthly Payments?
Even a small change in rate can add up. For example:
- On a $300,000 mortgage, the difference between a 6.00% rate and a 6.75% rate could mean paying more than $150 extra per month
- Over 30 years, that’s over $50,000 in additional interest
Improving your credit score before buying a home can make a major long?term impact.
What Factors Credit Unions Look At
While your credit score is important, it’s not the only factor we consider. We also look at:
- Your debt?to?income ratio
- Your employment and income stability
- Your down payment amount
- Your overall financial picture
Unlike big banks, credit unions take a more member?centered, personalized approach. We want to understand your story—not just your number.
How to Improve Your Credit Score Before Applying
If you’re planning to apply for a mortgage, here are a few steps that can make a big difference:
- Pay bills on time - Even one late payment can lower your score.
- Reduce credit card balances - Try to use less than 30% of your available credit.
- Avoid opening new accounts - Each new credit inquiry can temporarily lower your score.
- Check your credit report for errors - Mistakes aren’t uncommon—fixing them can help your score.
- Keep older accounts open - Longer credit history equals a healthier score.
Our team is here to help guide you through these steps if you’re unsure where to start.
Ready to Explore Your Mortgage Options?
Whether you’re buying your first home or exploring a refinance, our mortgage specialists are ready to help you understand your rate options and build a plan that fits your budget.
Contact us today to get started—or ask about our free credit review for members.
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