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How Important is Your Credit Score?

Gated Community photoThe information we receive about what is important when applying for mortgages seems to change daily.  One of the more confusing aspects of this process is how important your credit score actually is.  According to, there are both “official” and “unofficial” credit scores that are used when you apply for a mortgage to buy a home.

The “official” credit score is the score that is determined by various government-backed mortgage lenders. For example, FHA minimum guidelines require a minimum FICO score of 500 to be eligible for an FHA mortgage. If your score ranges between 500-579, you are required to make a down payment of 10%, but if you have a higher score, you only need to put 3.5% down. Fannie Mae/Freddie Mac require that borrowers’ credit scores be at least 620.

However, these scores often don’t matter as much in the “real world” of lending, per This is because lenders also have to look at the reason for a lower credit score before underwriting the loan. So if the lower score is caused by late payments or collections, the lenders will likely require a higher credit score than FHA or Fannie Mae, to protect their loans. For example, while Wells Fargo recently dropped its minimum credit score requirement to 620, it’s still higher than the FHA official minimum credit score requirement.

One of the most illuminating statistics is that over 97 percent of all FHA loan approvals went to applicants with scores above 620. ( There are mitigating circumstances, however, that can be considered by the lenders. Options for navigating this sometimes-complex process include contacting multiple lenders, or of course, using a loan explorer or marketplace, such as those offered by

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