It is no surprise that having a good credit score can get you a better mortgage. From the time you get your first credit card, you are taught that credit management habits are important — and for good reason. A few points can make a huge difference in the amount of interest you pay throughout the life of a mortgage.
If you are considering buying a home in the near future, you will want to first understand the relationship between credit score and mortgage rates to set yourself up for success.
Below are mortgage rates by credit score, based on the national average home price of $357,469 as of January 2025. The monthly payments are based on a 20 percent down payment.
| FICO® Score | National Average APR | 30-Year Fixed Mortgage Monthly Payment | 15-Year Fixed Mortgage Monthly Payment |
| 760 and Above | 7.2% | $2,591 | $3,253 |
| 700-759 | 7.4% | $2,630 | $3,285 |
| 680-699 | 7.55% | $2,660 | $3,309 |
| 660-679 | 7.6% | $2,669 | $3,370 |
| 640-659 | 7.71% | $2,691 | $3,335 |
| 620-639 | 7.86% | $2,721 | $3,360 |
Source: FICO® data
The short answer: A lot. An individual’s credit score is one of the main factors lenders look at in determining a borrower's risk level. Since your credit report shows whether or not you have made on-time loan payments in the past, it is a good indicator of whether you will be a reliable borrower for a mortgage in the future.
Check your report before applying for a mortgage and dispute any errors to improve your score.
Although it is best to have a high credit score, there are actions you can take when working toward getting a mortgage with bad credit. Consider saving up more money for a down payment to lower your risk profile. You can also shop around for alternatives to conventional loans, such as an FHA loan, which makes it possible to get a mortgage with a credit score of just 500.
For the best possible mortgage rate (currently 6.5 percent, according to the chart above), your credit score should be at least 760. This score sits in the middle of the range of what FICO® considers a “very good” score: 740–799.
Another less obvious benefit of having a high credit score is the money you will save on private mortgage insurance (PMI). Private mortgage insurance (PMI) is required on conventional mortgages for borrowers who put down less than 20 percent — which is why you will often see financial advisors suggest you strive for a 20 percent down payment.
Those with average credit scores in the 680–699 range with a five percent down payment will have a PMI premium of 0.96 percent. However, with a credit score of 760 or above, that rate drops to just 0.38 percent. The difference can save borrowers thousands annually.
Here are two key strategies to improve your credit and lower your interest rate.
To qualify for a lower mortgage interest rate, increase your credit score. There are a few ways you can do this:
Another way to qualify for a lower mortgage rate is to put more money into your down payment. This will lower your loan-to-value ratio, which is a metric lenders use to determine the risk level of the loan. Simply put, the loan-to-value ratio is the percentage of the home’s purchase price that you’re borrowing. So if you put 20 percent ($60,000) down on a $300,000 home, you are borrowing 80 percent ($240,000). Your loan-to-value ratio is 80 percent.
Lenders see loan-to-value ratios higher than 80 percent as a high risk, which will likely increase your mortgage rate — especially if other factors, such as credit score, are not in tip-top shape.
If you have already bought a home and are looking to lower your mortgage rate through a refinance, consider plugging your numbers into a refinancing calculator to determine if it’s your best option. Remember to consult your financial advisor if you’re unsure about major financial decisions.
Your credit is one of the biggest indicators of financial health, which is why we highly recommend that you check your credit to make sure it is free of any inaccuracies. You can check your FICO credit score and see a short summary of your credit report for free with our online credit assessment.