Your credit score significantly impacts the homebuying process. Lenders use it as a crucial factor to assess which loan options you qualify for and the terms you'll receive. However, there's a common misconception about credit scores that might be discouraging some buyers.

The Myth: You Must Have Flawless Credit

Fannie Mae reports that just 32% of potential homebuyers really understand what credit score lenders are looking for.

So, it turns out that about two-thirds of buyers aren't really clear on what lenders want. Plus, many of them think they need a higher minimum credit score than they actually do.

The Reality: Perfection Isn’t Required

You don't need perfect credit to buy a home. If you want to see the average credit scores for recent homebuyers based on different loan types, take a look at the graph below.

There's not a specific cut-off score that applies universally. According to FICO:

““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 . . .”
”

— FICO

Even if your credit score isn't exactly where you'd want it to be, you can still qualify for a home loan. Just keep in mind that while you don’t need a flawless credit score to purchase a home, your score can influence the loan options available to you and the terms you'll receive.

Partner with a reliable lender who can guide you through the qualification process.

Easy Ways to Boost Your Credit Score

If you're looking to expand your options after discussing with a lender, here are some tips from Experian and Freddie Mac to help improve your score:

1. Make Timely Payments on Your Bills

This covers everything from your credit cards to utility bills and other monthly expenses. When you consistently make your payments on time, it demonstrates to lenders that you are responsible and dependable.

2. Work on Paying Off Your Debt

Cutting down your total debt not only enhances your credit utilization ratio—showing how much credit you're actually using relative to your total limit—but it also positions you as a lower-risk borrower for lenders. This can increase your chances of getting approved for a loan with more favorable terms.

3. Avoid Applying for New Credit for Now

Opening new credit accounts might look like an easy way to enhance your score, but submitting too many applications in a short time can actually hurt it. It’s better to concentrate on improving your current accounts.

Bottom Line

You don’t need a perfect credit score to get a home loan. The smartest move is to connect with a reliable lender who can help you understand your options.