Your credit score is an essential factor that lenders consider when determining the interest rate for your mortgage. Your score can have a significant impact on the amount of interest you pay over the life of your loan, and can even determine whether you are approved for a mortgage at all.

Credit scores range from 300 to 850, and the higher your score, the lower the interest rate you can expect to receive. A good credit score is generally considered to be 700 or higher, while a score below 650 may result in higher interest rates and less favorable terms.

The reason why credit score matters is that lenders view borrowers with lower credit scores as higher risk borrowers. Lenders compensate for this risk by charging higher interest rates to protect themselves in case the borrower defaults on the loan.

If you have a lower credit score, there are steps you can take to improve it before applying for a mortgage. One of the most effective ways to improve your credit score is to make sure all your bills are paid on time, as late payments can negatively impact your score.

Additionally, you should work to reduce your debt-to-income ratio by paying off outstanding debts or increasing your income. This ratio measures how much debt you have compared to your income and is another factor that lenders consider when deciding whether to approve your mortgage application.

Ultimately, having a good credit score can save you thousands of dollars over the life of your mortgage. By taking steps to improve your score before applying for a mortgage, you can increase your chances of securing a lower interest rate and more favorable terms, ultimately saving you money in the long run.