Skip to main content
Advertiser Disclosure
We do receive compensation from some partners whose offers appear on this page. We have not reviewed all available products or offers. Compensation may impact the order in which offers appear on page, but our editorial opinions and ratings are not influenced by compensation.

Ascent-logo

  • Credit Cards
  • Banking
  • Brokerages
  • Loans
  • Mortgages
  • Knowledge
  • Latest Picks
  • Search Icon Click here to search

Credit Cards

Top Picks
  • Best of February 2021
  • Cash Back
  • Balance Transfer
  • Travel
  • 0% APR
  • Rewards
  • Bad Credit
Knowledge
  • Beginners Guide to Credit Cards
  • How to Rebuild Your Credit
  • Maximize Your Credit Card Rewards
  • Learn More About Credit Cards
Credit Card Tools
  • Compare Cards
Looking for a new credit card?

Explore the best credit cards in every category as of February 2021.

Get started!

Banking

Top Picks
  • Best Savings Accounts
  • Best Bank Accounts
  • Best Money Market Accounts
  • Best CDs
  • Best Checking Account Bonuses
Knowledge
  • Beginners Guide to Banking
  • Everything You Need to Know About Savings
  • Money Market Accounts Made Easy
  • Learn More About Banking
Looking for a place to park your cash?

Check out our top picks of the best online savings accounts for February 2021.

Get Started!

Brokerages

Top Picks
  • Best Brokers of February 2021
  • Best Online Brokers for Beginners
  • Best Options Brokers
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Robo Advisors
Knowledge
  • How to Open a Brokerage Account
  • Beginner's Guide to Brokerages
  • Learn More About Brokerage
Just getting started?

Explore our picks of the best brokerage accounts for beginners for February 2021.

Get Started!

Loans

Top Picks
  • Best Loans of February 2021
  • Best Personal Loans for Bad Credit
  • Best Loans for Debt Consolidation
  • Best Low-Interest Personal Loans
  • Best Personal Loans for Good Credit
  • Best Personal Loans for Fair Credit
Knowledge
  • Personal Loans Made Easy
  • Debt Consolidation Guide
  • How to Pay Off Debt
  • Learn More About Loans
Thinking about taking out a loan?

Before you apply for a personal loan, here's what you need to know.

Get Started!

Mortgages

Top Picks
  • Best Mortgage Lenders of February 2021
  • Best Mortgage Lenders for Poor Credit
  • Best Refinance Lenders
  • Best VA Mortgage Lenders
Knowledge
  • First Time Homebuyers Guide
  • Home Loans Made Easy
  • The Complete Guide to Refinancing
  • How to Get a Mortgage with Bad Credit
  • Learn More About Mortgages
Tools & Calculators
  • Mortgage Calculator
Compare Rates
  • Today's Mortgage Rates
  • Refinance Rates
  • 15-Year Mortgage Rates
  • 20-Year Mortgage Rates
  • 30-Year Mortgage Rates
  • Jumbo Mortgage Rates
  • VA Loan Rates
  • 5/1 ARM Rates
  • 7/1 ARM Rates
  • FHA Mortgage Rates

Knowledge

Knowledge Section
  • All Articles
  • Credit Card Articles
  • Banking Articles
  • Brokerage Articles
  • Personal Loan Articles
  • Mortgage Articles
  • Personal Finance Articles
Recent Articles
  • How I Make Money Paying Taxes With a Credit Card

    Credit Cards

    How I Make Money Paying Taxes With a Credit Card
  • The 4 Best Ways to Use Your Amex Membership Rewards Now (B.Myers)

    Credit Cards

    The 4 Best Ways to Use Your Amex Membership Rewards Now (B.Myers)
  • The 5 Best Ways to Use Your Chase Ultimate Rewards Points Now

    Credit Cards

    The 5 Best Ways to Use Your Chase Ultimate Rewards Points Now
  • I've Earned Over 10,000 Points on Everyday Spending With Chase Rewards Cards

    Credit Cards

    I've Earned Over 10,000 Points on Everyday Spending With Chase Rewards Cards
  • The Ascent
  • Knowledge
  • Mortgages

Here's Why You May Need a Higher Credit Score to Get a Mortgage Today

by Maurie Backman | Feb. 16, 2021

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

credit report showing score of 765

Image source: Getty Images

Thinking of applying for a home loan? Make sure your credit is solid.

You'll need to meet certain criteria to qualify for a mortgage. As a general rule, you'll need a good credit score, a reasonable debt-to-income ratio, and a stable source of income. But actually, in today's borrowing environment, a good credit score may not cut it. Rather, you may need to aim for a great score.

The average credit score among mortgage borrowers in 2020's third quarter was 786, according to the New York Federal Reserve. For context, the average U.S. credit score is 706. While you'll generally need a minimum credit score of 620 to qualify for a conventional mortgage, lenders can set their own standards. And based on this data, it's clear that mortgage lenders are raising the bar for borrowers who want home loans during these difficult economic times.

How to boost your credit score

First, let's be clear. Just because the average borrower's credit score was 786 in last year's third quarter doesn't mean you won't qualify for a mortgage with a lower score. But the higher your score, the more likely you'll be to snag today's best mortgage interest rates. As such, it pays to work on boosting your score if it's not where you'd like it to be.

How do you do that?

Get $150 off closing costs with Better.com Mortgage

Get $150 off closing costs with Better.com Mortgage

This is one of the top lenders we've used personally to secure big savings. No commissions, no origination fee, low rates. Get a loan estimate instantly and $150 off closing costs.

Learn More

Start by paying all incoming bills on time. Of the various factors that go into calculating your credit score, your payment history carries the most weight. Being timely with your payments can help this aspect of your score improve. So set up autopay for your bills and shed non-essential expenses to make it easier to keep up with your living costs.

Next, look at paying off some existing credit card debt if you can. The second most important factor that goes into determining your score is your credit utilization ratio, which speaks to the amount of revolving credit you're using at once. Ideally, that ratio should not exceed 30%. If you have a total credit limit of $10,000 and owe $3,500 on your various credit cards, you could improve your score by paying down even $500.

Furthermore, it's a good idea to check your credit report for errors. There might be, for example, a delinquent debt you never racked up. It might belong to someone with the same name but a different Social Security number. These mistakes can happen, but working with the credit bureaus to correct them could help your score rise.

Finally, if you're serious about buying a home, don't apply for any other credit in the near term. Each credit card application you fill out, for example, will result in a hard inquiry on your credit record. A single hard inquiry won't hurt your credit score too badly, but multiple hard inquiries will. If your score is right on the cusp of being excellent, it would be a shame for something like a seven- or eight-point hit (which is what might happen with a single hard inquiry) to drop it down.

Lenders are getting stricter

You don't necessarily need a credit score of 786 to get a mortgage, but you may need to prepare for the fact that lenders are getting stricter. If your score needs work, boosting it could mean you're more likely to get approved for a home loan. On top of that, you could snag a competitive rate and keep your monthly payments affordable for many years to come.

A historic opportunity to potentially save thousands on your mortgage

Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase. 

Our expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See our full advertiser disclosure here.

About the Author

Maurie Backman
Maurie Backman icon-button-linkedin-2x

Maurie Backman is a personal finance writer who covers everything from savings to retirement to healthcare. Her articles have appeared broadly on major outlets such as CNBC, MSN, and Yahoo.

Share This Page
Facebook Icon This icon shares the page you are on via Facebook
Blue Twitter Icon Share this website with Twitter
LinkedIn Icon This image links to share the page over LinkedIn.
Email Icon Share this website with email
The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

Related Articles

"Rates" on a stick note on a house image for Find the Best Mortgage Rates

Find the Best Mortgage Rates

Cardboard cutout house on a desk image for Best Mortgage Lenders for 2021

Best Mortgage Lenders for 2021

Money bags and a model house sit on a balance beam image for Best Mortgage Refinance Lenders for 2021

Best Mortgage Refinance Lenders for 2021

Change on a desk image for Mortgage Payment Calculator

Mortgage Payment Calculator

Featured Articles

Find the Best Mortgage Rates

Best Mortgage Lenders for 2021

Best Mortgage Refinance Lenders for 2021

Mortgage Payment Calculator


We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Ascent Logo

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

btn_facebook-yellow btn_twitter-yellow btn_instagram-yellow

Copyright © 2018 - 2021 The Ascent. All rights reserved.

About The Ascent
About Us Contact Us Newsroom How We Make Money Editorial Integrity Ratings Methodology
Legal
Terms of Use Privacy Policy Accessibility Policy Terms and Conditions Copyright, Trademark and Patent Information
Learn
Credit Cards Banking Brokerage Loans Recent Articles

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Back to The Motley Fool