Fannie Mae found that 9 out of 10 buyers either don’t know what credit score lenders want or think the minimum score needed is higher than it really is.

Take a moment to really think about this: a lot of homebuyers believe they need a higher credit score than what’s actually required. You might be one of them. That misconception can make buying a home feel impossible right now, even if it isn’t. So, let’s dive into what the numbers really say about credit scores and buying a home.

There’s No One Magic Number

When it comes to buying a home, there isn’t one set credit score you have to meet. This means there’s actually more room to work with than many people think. Take a look at this graph that breaks down the median credit scores of recent buyers across different types of home loans:

Here’s the key thing to understand: the numbers can be different for everyone, and there isn’t a single magic number that applies to all. That means opportunities might exist even if you thought they didn’t. The best step is to reach out to a trusted lender to get the full picture. As FICO puts it:

““While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single ‘cutoff score’ used by all lenders, and there are many additional factors that lenders may use . . .”
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— FICO

Why Your Score Still Matters

When you’re buying a home, lenders look at your credit score to understand how dependable you are with money. They want to know if you usually pay your bills on time, manage your debts well, and handle your finances responsibly.

Your credit score plays a key role in the kinds of loans you can get, the terms you'll be offered, and your mortgage interest rate. Because mortgage rates heavily influence how much home you can afford, your credit score feels even more important right now. As Bankrate points out:

““Your credit score is one of the most important factors lenders consider when you apply for a mortgage. Not just to qualify for the loan itself, but for the conditions: Typically, the higher your score, the lower the interest rates and better terms you’ll qualify for.”
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— Bankrate

Your credit doesn’t have to be perfect. Even if your credit score isn’t as high as you want, you could still qualify for a home loan.

• Try to pay down your debt as much as you can. The less of your available credit you’re using, the better it looks to lenders. Keeping your credit usage low shows that you’re a lower-risk borrower, which can help you get approved for a loan with better terms.

• Take a look at your credit report and make sure everything is accurate. If you spot any mistakes, fix them—this can boost your credit score.

• Try to avoid opening new credit accounts right now. Even though it might seem like a good idea to get more credit cards to boost your score, applying for several new ones can cause hard inquiries on your credit report. These inquiries can temporarily bring your score down, so it's better to hold off for a while.

Want To Boost Your Score? Start Here

If you chat with a lender and think about boosting your credit score (which could also help you get better loan options and terms), here are some smart tips from the Federal Reserve Board to consider:

Bottom Line

You don’t need a perfect credit score to qualify for a home loan. That said, having a higher score can help you secure better loan terms. The smartest move is to reach out to a trusted lender who can show you where you stand and explore your mortgage options.