By Mike Baker | The Rate Shop | NMLS #259076
A 780 mortgage credit score puts you in the highest score range on Fannie Mae's standard purchase fee table. You don't need an 800 to reach that range. The best interest rate and fees you can actually get also depend on your down payment, loan program and lender.
Here's what surprises buyers when I run their numbers. Going from a 739 to a 740 can change a quote. Going from a 780 to an 800 might leave it exactly where it was. Before you spend money trying to raise your score, I'd want you to see what that extra point is worth on your loan.
Why can one credit score point change a mortgage quote?
On conventional loans that Fannie Mae buys, it can charge the lender a fee based in part on the buyer's credit score. A single point can matter when it moves you into a different score range, however it may not affect things as much as you think.
For instance lets say you're buying a $400,000 home with 20% down and taking out a $320,000, 30-year conventional loan.
Moving from a 739 to a 740 credit score could save you approximately $1200 on the costs of the loan.
I'd look at your actual quote to see whether the higher score gets you a lower interest rate, lower upfront fees or both.
Should you pay down a credit card for a better mortgage rate?
I'd quote the same loan twice on the same day with the same lender. I'd keep the down payment, loan term and lock period the same, then see what changes at the higher score. If the rate stays the same, we can compare upfront fees. If the rate drops, we can compare the fees and how much interest you'd save over the time you expect to keep the loan. CFPB guide to comparing Loan Estimates
Now say your quote at 740 saves you $1,200 in fees at the same rate, and we estimate it would take a $5,000 credit card paydown to get there. If it works and everything else stays the same, you owe $5,000 less on the card and have $3,800 less cash left after closing than if you'd kept the original quote and held on to your savings. In that scenario it doesn’t make a lot of sense to spend $5,000 to only save $1,200.
Paying down a high-interest card can make sense. If that $5,000 is the cushion you were counting on after you move in, I'd want to talk it through before you touch it. How I weigh paying off debt against saving for a down payment
Here's what I'd ask any loan officer.
“Can you show me both quotes and how much cash I'd have left after closing?”
Is it worth waiting for an 800 credit score?
On the conventional quotes I run, I generally see the same rate and lender fees at 780 and 800 when the rest of the loan stays the same. If your loan has private mortgage insurance, we can check that cost separately. I'd run both numbers for you before you put your home search on hold.
Why is my mortgage credit score different from Credit Karma?
Credit Karma shows VantageScore 3.0 scores based on data from Equifax and TransUnion. For eligible loans sold to Fannie Mae or Freddie Mac, approved lenders can use Classic FICO or VantageScore 4.0. The scoring model, the credit bureau and when the report was pulled can all affect the number. I often see a higher score in the app, but it can go the other way too. Credit Karma's score explanation · FHFA's mortgage credit score guidance
How a buyer went from a 609 score to a loan approval
I worked with a buyer whose mortgage score came back at 609. We couldn't get the loan approved at that score. They paid a few hundred dollars toward a credit card balance, their score went above 620, and we got the loan approved.
That 620 mark mattered for their loan. Lenders can set their own score requirements, and Fannie Mae's automated underwriting system now uses its own credit assessment in place of a blanket minimum score. If you've been turned down, ask where the score requirement came from. That tells us whether to work on your credit first or look at what a different lender can offer. Fannie Mae's underwriting update · How lender-specific rules work
When should you work on your score before buying?
I'd rather hear from you a few months before you're ready to buy. A year out is fine. I can use my credit report provider's simulator to estimate what paying down a specific balance might do. Then you have time to decide if the change is worth making and let it show up on your report.
If you're already under contract, my first priority is making sure we have a loan you can close on time. Before you move any money, I'll check what cash you'll need at closing, what proof the lender needs and whether there's time to get an updated score.
Common questions
Which credit score counts if we apply together?
For Fannie Mae's score-based fees, the lender finds the applicable score for each borrower, then uses the lowest of those scores. For example, if your applicable scores are 780 and 739, the fee calculation uses 739. Ask which score your lender used when putting together your quote. Fannie Mae's guide to choosing the loan's credit score
Can a rapid rescore help before closing?
A lender may be able to request a faster credit report update once you can document a change, such as a lower balance. Ask what proof the lender needs and when it expects the updated score. The size of any score change depends on what else is in your credit report. Experian's rapid rescore explanation
What if my credit score improves after I lock my mortgage rate?
Ask whether the lender can use your updated score, what it would change about your rate or fees, and whether your closing date still works. Your lock terms and the lender's rules determine what it can offer. CFPB guidance on rate locks · What to ask before you lock
If you're buying in the Kansas City area on either side of the state line, let's look at what your score gets you today and what would actually change if it went up. Set up a free conversation with me.
