The minimum credit score lenders will accept

Most mortgage lenders will work with a credit score as low as 580 if you are putting down 3.5 percent through an FHA loan. Conventional loans — the kind backed by Fannie Mae or Freddie Mac — typically require a score of 620 or higher. VA loans and USDA loans have their own rules and often accept scores in the 580 to 620 range, depending on the lender.

The score that matters is the one the lender pulls from one of the three credit bureaus (Equifax, Experian, or TransUnion) on the day you submit your process. You cannot see this exact score yourself until after the lender orders it. The free scores you see on your own credit monitoring apps or bank websites are estimates and may differ by 20 to 50 points from what a lender sees.

A score below 580 does not automatically disqualify you, but it narrows your options sharply. Some credit unions and portfolio lenders (banks that keep loans on their own books rather than selling them) will go lower, but you will pay a higher interest rate and may face stricter down payment requirements. The lower your score, the more expensive borrowing becomes.

Key Takeaways

  • FHA loans accept credit scores as low as 580, while conventional loans typically start at 620.
  • The score a lender pulls on process day is what matters, not the free score you monitor yourself.
  • Scores below 620 result in higher interest rates, which can cost you tens of thousands of dollars over the life of the loan.
  • Recent late payments, high credit card balances, and new accounts opened shortly before explore all hurt your score and your rate.
  • If your score is below 620, waiting three to six months while you pay down balances and avoid new debt can meaningfully improve your rate.

How your credit score affects your interest rate

The relationship between credit score and interest rate is direct and steep. A borrower with a 740 score might receive a 6.5 percent rate on a 30-year mortgage, while a borrower with a 620 score on the same loan could pay 7.5 percent or higher. That one-point difference costs roughly $100 more per month on a $300,000 loan — or $36,000 over the life of the mortgage.

Lenders use your credit score as a proxy for risk. A higher score signals that you have paid past debts on time and do not carry excessive debt relative to your income. A lower score suggests you have missed payments, carried high balances, or both. Lenders price that risk into your rate. You cannot negotiate around this; the rate is determined by automated underwriting systems that factor in your score along with your down payment size, loan type, and debt-to-income ratio.

The difference compounds over time. If you can raise your score from 620 to 680 before explore, you might lower your rate by 0.5 to 1 percent. On a $300,000 loan, that saves you $50 to $100 per month and tens of thousands of dollars in total interest. This is why waiting a few months to improve your score often makes financial sense, even if you feel ready to buy now.

What lenders look at beyond your score

Your credit score is a three-digit summary, but lenders also pull your full credit report and examine the details underneath. They look at the age of your oldest account, how many accounts you have opened in the past year, whether you have any collections or judgments, and the specific reason you missed payments (a one-time late payment is viewed differently than a pattern of missed payments).

Recent late payments hurt more than old ones. A 30-day late payment from six months ago will damage your score more than a 30-day late payment from three years ago. If you have a recent late payment, waiting at least six months before explore gives the lender time to see that you have returned to on-time payments. Lenders also scrutinize the timing of new accounts. If you opened a credit card or car loan within the past three months, it signals that you are taking on new debt right before a major purchase, which raises red flags.

Your debt-to-income ratio — the total of all your monthly debt payments divided by your gross monthly income — matters as much as your credit score. Even with a 700 score, if your debt payments already consume 50 percent of your income, a lender may deny you or offer a smaller loan. Paying down credit card balances before you explore lowers this ratio and can improve both your score and your loan amount.

Steps to improve your score before explore

If your score is below 620, the most effective moves are to pay down credit card balances and avoid opening new accounts. Credit card balances make up 30 percent of your credit score calculation. Paying a card from 80 percent of its limit down to 30 percent can raise your score by 20 to 40 points within one or two billing cycles. This is the fastest lever you control.

Do not close old credit cards after you pay them down. Closing an account lowers your available credit and can actually hurt your score. Instead, leave the account open with a zero balance. Similarly, do not explore for new credit cards, car loans, or personal loans while you are preparing to buy. Each process triggers a hard inquiry, which temporarily lowers your score by a few points. Multiple inquiries in a short period signal that you are desperate for credit, which concerns lenders.

Check your credit report for errors at annualcreditreport.com, the official site run by the three bureaus. Errors are common — a late payment that was not actually yours, an account opened in your name by mistake, or a paid-off debt still showing as active. Disputing errors takes four to six weeks, so start early. If you find legitimate errors, getting them removed can raise your score by 50 to 100 points.

If you have a pattern of late payments, the best strategy is time. Lenders care most about your recent history. If you can go six months to a year with all on-time payments, your score will improve noticeably. This is why waiting three to six months before explore often makes sense if your score is below 620 and you have recent late payments.

When a co-borrower or co-signer helps

If your score is too low to may have access to on your own, adding a co-borrower — usually a spouse or partner — combines both of your credit profiles. The lender will pull both scores and use the lower of the two for qualification purposes. This only helps if your co-borrower has a meaningfully higher score. If both of you are in the 580 to 620 range, adding a co-borrower will not change the outcome.

A co-signer is different from a co-borrower. A co-signer does not appear on the deed and has no ownership stake in the house, but they are legally responsible for the loan if you stop paying. Most mortgage lenders do not accept co-signers for home loans the way personal loan lenders do. If you need a co-signer to may have access to for a mortgage, you likely need to wait and improve your own score instead, because most lenders will not structure a home loan that way.

Loan types and their credit score requirements

FHA loans are backed by the Federal Housing Administration and are designed for borrowers with lower credit scores and smaller down payments. The minimum score is typically 580 for a 3.5 percent down payment. Some lenders will go as low as 500 if you put down 10 percent, but rates are higher and you will pay mortgage insurance for the life of the loan.

Conventional loans are not backed by any government agency. They typically require a 620 score for a 3 percent down payment, or a 680 score for a 5 percent down payment. Rates are usually lower than FHA loans if your score is above 680, but higher if your score is between 620 and 680.

VA loans are for active-duty military, veterans, and surviving spouses. The VA does not set a minimum credit score, but individual lenders typically require 580 to 620. VA loans often have the lowest rates available because the VA guarantees a portion of the loan to the lender.

USDA loans are for rural properties and are available to borrowers with moderate incomes. The USDA does not set a minimum score, but lenders typically require 580 to 640. Like VA loans, USDA loans often have competitive rates because the government backs them.

What happens if you are denied

If a lender denies you, they must provide a written reason. Common reasons are a score below their minimum, a recent late payment or collection account, a debt-to-income ratio above their limit, or insufficient income to support the loan amount you requested. The denial letter will tell you which factor or factors caused the rejection.

You have the right to request a copy of the credit report the lender pulled. Review it carefully for errors. If you find mistakes, dispute them with the bureau and ask the lender to reconsider once the errors are corrected. If the denial was due to a low score or high debt-to-income ratio, you have a clear path: wait three to six months, pay down balances, and explore again. Your score will improve and your debt ratio will fall.

If you were denied by a conventional lender, an FHA loan may be an option. FHA loans accept lower scores and are more forgiving of recent late payments if you can explain the circumstances. However, FHA loans require mortgage insurance, which adds to your monthly payment. Weigh the cost of mortgage insurance against the benefit of buying sooner versus waiting to improve your score and may have access to for a conventional loan.

Frequently Asked Questions

Does checking my own credit score hurt it?

No. Checking your own credit score is a soft inquiry and does not affect your score. Only hard inquiries — when a lender or creditor pulls your report to make a lending decision — lower your score. You can check your score as often as you want without penalty.

How long does it take to improve a credit score?

Paying down a credit card balance can raise your score by 20 to 40 points within one or two billing cycles. Removing a late payment from your history takes longer — typically six months to a year of on-time payments before the impact on your score noticeably fades. Errors on your report can be removed in four to six weeks if you dispute them.

Can I get a mortgage with a 580 credit score?

Yes, through an FHA loan with a 3.5 percent down payment. You will pay a higher interest rate than someone with a 680 score, and you will pay mortgage insurance for the life of the loan. If you can wait three to six months to raise your score to 620 or higher, you will save money on interest and may avoid mortgage insurance altogether.

What if I have no credit history?

No credit history is different from a low credit score. Lenders cannot score you without accounts to report, so you will need to build credit first. Open a credit card or secured credit card, make small purchases, and pay the full balance on time for six to twelve months. Once you have six months of payment history, you can explore for a mortgage, though you may face stricter requirements than someone with a higher score.

Does paying off collections improve my credit score?

Paying off a collection account stops the damage from getting worse, but it does not remove the account from your report or when ready raise your score. The collection will remain on your report for seven years from the original delinquency date. However, lenders view a paid collection more favorably than an unpaid one, so paying it off before you explore improves your chances of approval.