How Your Credit Score Affects Mortgage Rates

By Kyle Koller

Producing Branch Manager of UMortgage West - The #1 Producing Team at UMortgage

Did you know that a difference of just 20 points in your credit score could cost you thousands of dollars in mortgage interest?

If you’re planning to buy a home, your credit score plays a bigger role than most people realize. It does not just affect whether you get approved. It impacts your interest rate, your monthly payment, and even what type of loan you qualify for.

Here are three things every buyer should understand before applying:

First, higher credit scores mean lower interest rates. Lenders see higher scores as less risk. That usually translates into better rates and lower monthly payments. Even a small drop in your score can push you into a higher rate tier and can easily cost thousands across the life of a loan.

Second, your credit score affects loan approval and loan type. A lower score can limit your options. Some buyers may need a higher down payment, private mortgage insurance, or may not qualify for certain loan programs at all. This is often where buyers feel surprised, especially if they assumed approval was automatic.

Third, credit utilization matters more than people think. A good rule of thumb is to keep your credit card balances below 30% of your total credit limit. High utilization can quickly pull your score down, even if you pay on time. Lower balances can help improve your score without opening or closing accounts.

If you’re serious about getting better mortgage terms, preparation matters. Check your credit early, fix any errors, pay down balances, and give yourself time before applying.

If you want help reviewing your credit, I can do a soft pull if I’m licensed in your state. You can book a free call with me using the link below:

Schedule a 1:1 call with Kyle.

You can also reach me at (801) 687-2018 or kkoller@umortgage.com. That lets us build a plan without hurting your score and put you in the best position before you apply.