One of the biggest surprises I see when working with homebuyers is that many people don’t actually know what their mortgage credit score is.
They know the score they saw on Credit Karma, their banking app, or another credit monitoring service. They assume that’s the score a mortgage lender will use.
Often, it isn’t.
And that difference can cost far more than most people realize.
Not All Credit Scores Are the Same
There isn’t just one credit score.
Today, lenders may use either traditional FICO mortgage scores or VantageScore for eligible loans, depending on the lender and loan program. Even when you check your score online, it may not be the same scoring model that’s ultimately used to qualify you for a mortgage.
That’s why it’s common for someone to tell me:
“My credit score is around 740.”
After pulling their mortgage credit, we sometimes find the score used for financing is meaningfully different — sometimes higher, but often lower — than what they expected.
The only way to know for certain is to have your credit reviewed by a mortgage professional.
A Few Points Can Make a Big Difference
Here’s an example based on a $480,000 conventional 30-year fixed loan.
| Credit Score | Interest Rate | Monthly Principal & Interest |
|---|---|---|
| 640 | 7.577% | $3,381.57 |
| 660 | 7.463% | $3,344.08 |
| 680 | 7.434% | $3,334.56 |
| 700 | 7.306% | $3,292.70 |
| 720 | 7.278% | $3,283.57 |
| 740 | 7.063% | $3,213.79 |
| 760 | 6.984% | $3,188.30 |
| 780 | 6.929% | $3,170.60 |
The rates shown above are illustrative examples for comparison only — not a quote, rate lock, or commitment to lend. Actual rates depend on your complete financial profile and market conditions, and they change daily.
The difference between a 640 and a 780 credit score?
- $210.97 more every month
- $2,531.64 more every year
- More than $75,000 over the life of a 30-year loan
That’s money many buyers never realize they’re paying.
The Good News
Credit scores aren’t permanent.
In many cases, buyers can improve their score before purchasing a home by:
- Paying down credit card balances
- Correcting reporting errors
- Avoiding new debt before closing
- Working with their loan officer to determine which actions will have the greatest impact
Sometimes a relatively small improvement in a credit score can result in a significantly lower interest rate.
Talk to a Loan Officer Early
One of the biggest mistakes buyers make is waiting until they’ve found the perfect home before talking with a lender.
Getting pre-approved early gives us time to review your credit, identify opportunities to improve your score, and help you qualify for the best financing available.
If you’re thinking about buying a home, let’s review your credit before you start shopping. A few points today could save you thousands tomorrow.
Learn more at: https://loansbygarry.com
Garry McDonald
Loan Officer | Tried & True Home Loans
(949) 534-6686 | gmcdonald@triedandtruehomeloans.com
DRE# 01781703 | NMLS# 1922072
Equal Housing Opportunity.