What Credit Score Do I Need to Buy a House? A 2024 Guide

To buy a house with a mortgage, you will typically need a minimum credit score of 620 for a conventional loan. However, government-backed loans like FHA loans can accept scores as low as 500 with a larger down payment. Your credit score is one of the most critical factors lenders evaluate, and improving it before you apply can save you thousands of dollars over the life of your loan.

This article provides a clear breakdown of minimum credit score requirements by loan type and practical steps you can take to improve your score.

What Is a Credit Score and Why Does It Matter for a Mortgage?

Your credit score, often referred to as a FICO score in the lending context, is a numerical representation of your creditworthiness. It is calculated based on your history of managing debt, including payment history, amounts owed, and length of credit history. When you apply for a mortgage, lenders use this score to assess the risk of lending you money. A higher score not only increases your chances of approval but also qualifies you for better interest rates.

What Are the Minimum Credit Score Requirements by Loan Type?

Different mortgage programs have varying credit score thresholds. The required minimums for 2024 are outlined in the table below.

It is important to note that these are general guidelines. Individual lenders may set their own, stricter requirements.

How Can I Check My Credit Report for Errors?

You have the right to obtain a free copy of your credit report every 12 months from each of the three major nationwide credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. Your credit report is the detailed history used to calculate your score.

Once you have your reports, review them carefully for inaccuracies, such as incorrect account details or payments wrongly reported as late. A 2021 study by Consumer Reports found that over a third of participants identified errors on their reports. If you find a mistake, you can file a dispute with the credit bureau and the company that provided the information, following guidelines from the Federal Trade Commission (FTC). Correcting errors can lead to a meaningful increase in your score.

What Are the Most Effective Ways to Improve My Credit Score?

Improving your credit score is a proactive process. Based on our experience assessment, the most effective strategies include:

• Dispute Inaccuracies: As mentioned, promptly challenging and correcting errors on your report is a straightforward way to boost your score.
• Negotiate the Removal of Late Payments: If you have a one-time late payment on an otherwise perfect record, contact the creditor. They may agree to remove it from your credit history as a goodwill gesture.
• Lower Your Credit Utilization Ratio: This ratio compares your total credit card debt to your total available credit limits. Paying down existing debt is the most effective method. If that is not immediately possible, asking your credit card companies to increase your credit limits will also lower this ratio, which can positively impact your score.
• Commit to On-Time Payments: Your payment history is the single largest factor in your score, accounting for 35%. Setting up automatic payments can ensure you never miss a due date. While negative marks like late payments can stay on your report for up to seven years, consistently making on-time payments from today forward will demonstrate improved financial behavior to lenders.

Start reviewing your credit reports early in the home-buying process. Correcting errors and building a positive payment history takes time, but the financial benefits of a higher score are significant.