Your credit score is one of the first things a lender looks at — and it affects not just whether you qualify, but what interest rate you get. Here's a breakdown by loan type.
Minimum scores by loan type
- Conventional loan: Many lenders look for 620+, though Fannie Mae's automated underwriting no longer applies a fixed 620 minimum. To get the best rates, you want 740+.
- FHA loan: 580 with 3.5% down. 500-579 with 10% down. Below 500 is not eligible.
- VA loan: No official minimum — but most lenders require 620.
- USDA loan: Typically 640+.
How your score affects your rate
Lenders use risk-based pricing. The lower your score, the higher the risk they're taking on — so they charge a higher rate to compensate. Even a 20-point difference in score can move your rate meaningfully at certain thresholds.
What goes into your credit score
- Payment history (35%): On-time payments are the biggest factor. One 30-day late can drop you 50-100 points.
- Credit utilization (30%): How much of your available credit you're using. Keep it under 30%, ideally under 10%.
- Length of credit history (15%): Older accounts help. Don't close them.
- Credit mix (10%): Having different types (credit cards, auto loan, etc.) helps slightly.
- New inquiries (10%): Hard pulls from new applications temporarily lower your score.
How to improve your score before applying
Pay down credit card balances as much as possible — especially if you're above 30% utilization on any card. Don't open new accounts or close old ones. Dispute any errors on your credit report (you can pull it free at annualcreditreport.com). If you have collections, talk to a lender before paying them — paying old collections can sometimes temporarily lower your score.
These are general guidelines. Credit score requirements can vary by lender. Speak with a licensed loan officer for guidance specific to your situation.