How Credit Scores Affect Your Mortgage

By Julio Cobian, Mortgage Advisor in Chico, CA

When it comes to buying a home, your credit score can make a big difference. Many buyers wonder what score they need and how it impacts their loan options. Here’s what you should know before applying for a mortgage.

1. Why Credit Scores Matter

Lenders use your credit score to measure how likely you are to repay your loan. A higher score often means lower interest rates and more flexible loan programs. Even a small difference in your score can save you thousands over the life of your mortgage.

2. What’s the Minimum Score to Qualify?

• Conventional Loans usually require a score of 620 or higher.

• FHA Loans can go as low as 580 with 3.5% down.

• VA Loans are more flexible, depending on the lender.

• ITIN Programs have unique requirements, but credit history is still important.

3. How Your Score Impacts Rates

For example, a buyer with a 740 score may qualify for a lower interest rate than someone with a 640. That difference could mean hundreds less in your monthly payment.

4. Tips to Improve Your Credit Before Buying

• Pay bills on time every month.

• Keep credit card balances low—ideally under 30% of the limit.

• Avoid opening new credit accounts before applying.

• Check your report for errors and dispute them if needed.

Final Thoughts

Your credit score is one of the most powerful tools you have when preparing to buy a home. The good news? It can be improved with time and the right habits. As a mortgage lender in Chico, CA, I can help you review your options and create a plan to qualify for the best loan possible.

📲 DM me today or call if you’d like to go over your credit and home loan options.