Do Mortgage Rates Vary By FICO Score (Fair Isaac)?

Yes, your FICO score (Fair Isaac Corporation score) changes mortgage rates because lenders tier pricing by score; a higher score typically yields a lower rate, often shaving 10‑30 basis points for every 20‑point jump, while a lower score can add 30‑50 basis points or more.

Lenders slot borrowers into one of the five FICO ranges covered in the next section and then apply the basis‑point gaps explained in the 'expect these basis‑point gaps by your FICO band' portion. Other variables like DTI matter, but the FICO score is the primary driver of rate movement.

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• Below 620 - most lenders deny conventional mortgages; only government‑backed programs like FHA may consider you, usually at higher rates.
• 620  -  679 - classified as subprime; lenders add roughly 50‑150 basis points to the baseline rate.
• 680  -  739 - prime range; rates sit 20‑50 basis points above the lowest market offering.
• 740  -  799 - high‑prime; lenders price you within 10‑20 basis points of the best rate.
• 800  -  850 - super‑prime; you typically receive the lender's lowest advertised rate, sometimes a few basis points under the market floor.

Lenders price mortgages in tidy increments, so your Fair Isaac Corporation (FICO) score usually translates into a predictable basis‑point spread. Below is the typical gap you'll see compared with the 'prime' 700‑739 tier, assuming comparable loan size, DTI and other factors.

• 620‑659 ≈ +70 to +90 basis points
• 660‑699 ≈ +30 to +50 basis points
• 700‑739 ≈ baseline (no adjustment)
• 740‑779 ≈ ‑20 to ‑35 basis points
• 780 + ≈ ‑40 to ‑60 basis points

Lenders that use strict brackets treat the Fair Isaac Corporation score like a ladder: a 760‑plus FICO earns the 'prime' rate, while 720‑759 typically adds 10‑15 basis points, 680‑719 adds 20‑30 basis points, and anything below 680 can cost 40 basis points or more. This step‑function pricing creates obvious jumps between the ranges we outlined earlier, so a single point change inside a band rarely moves the rate.

Other lenders calculate rates more fluidly, applying a small per‑point adjustment - often around 0.25 basis points per score point. In that model a 750 score might be priced 5 basis points lower than a 740, and a 735 could beat a 730 by just 1 basis point. The curve stays smooth across the five FICO ranges, reducing sudden penalties for dropping a few points. Consumer Finance Board explains how granular pricing works.

A 20‑point rise in your FICO score can shave your mortgage rate, but only when it moves you into the next pricing band that lenders use (see '5 FICO ranges lenders will use on you'). Typically, crossing a band saves 5 - 15 basis points, though exact numbers vary by lender.

If the boost keeps you within the same band - say from 750 to 770 - you'll generally see no rate change, because lenders price that entire range the same. Remember that DTI, loan‑to‑value and loan type still affect the final offer.

FICO score (Fair Isaac Corporation score) and DTI are the two primary levers lenders pull when pricing a mortgage. Lenders assign a weight to each: the credit score typically shifts the rate by 15‑30 basis points per 20‑point band, while DTI can add or subtract a similar range depending on how comfortably your debt load fits the loan size.

In practice, a borrower with a 740 FICO score and a 28% DTI may qualify for a rate 20 basis points lower than someone with the same score but a 38% DTI.

Because lenders view FICO score as an indicator of repayment risk and DTI as a measure of current cash‑flow strain, they will often accept a higher DTI if the credit score sits in the top tier (e.g., 760+).

Conversely, a stellar DTI cannot fully offset a sub‑620 FICO score, which generally forces a rate bump of 30‑40 basis points regardless of debt load. This trade‑off explains why the later '5 moves to shave your mortgage rate by raising FICO' section focuses on improving credit first, then tightening DTI for maximum impact.

Raising your FICO score even a few points can trim 10‑20 basis points off a conventional mortgage rate. Below are five proven moves that typically lift the score enough to capture the pricing gaps described earlier.

1. Pay down revolving balances - Reduce credit‑card utilization below 30 % (ideally under 10 %). Lenders weigh this ratio heavily, and the drop often adds 20‑40 points in just a month.
2. Correct errors on your credit report - Dispute inaccurate late payments or duplicate accounts. A single removal can boost the score by 15‑30 points and instantly improve the rate you qualify for.
3. Add a secured credit card or credit‑builder loan - Opening a low‑limit, on‑time account shows positive payment history and lengthens average account age, typically adding 10‑20 points within six months.
4. Shift old balances to a new account - Transfer a high‑interest card balance to a newly opened card with a higher limit. The immediate reduction in utilization can raise the score 10‑15 points without harming the average age too much.
5. Avoid new hard inquiries before applying - Each inquiry can shave 5‑10 points for 12 months. Pause applications for credit cards or loans until after you lock in your mortgage rate to preserve every point you earned.

Lock the rate as soon as your FICO score lands in the range that shaves the most basis points off your mortgage.

Once you cross the threshold proven in the '5 FICO ranges lenders will use' and 'expect these basis‑point gaps' sections, the price advantage becomes locked in; waiting longer only risks a market move that could erase the gain.

• Track your score weekly; note the exact band where the pricing gap widens.
• Pause new credit inquiries for 30 days before you expect the jump, so the score stabilizes.
• Initiate the lock 30‑45 days before you plan to submit the loan, because most lenders honor a rate for that window.
• Choose a 45‑day lock if you anticipate a modest (5‑10‑point) increase; a shorter lock saves you if rates rise unexpectedly.
• Skip locking if you still expect a major score swing (20 points or more) that could push you into a lower‑cost band.

Secure the lock at the optimal band, then move on to the next challenge: self‑employed borrowers with low FICO scores and their rate options.

Self‑employed borrowers with a low FICO score can still obtain a mortgage by targeting government‑backed or non‑QM programs that prioritize stable cash flow over credit.

These options generally add 25 - 75 basis points to the base rate you saw in the 'expect these basis‑point gaps by your FICO band' section. FHA loans allow 3.5% down and accept DTI up to 50%; VA loans require no down payment and tolerate DTI around 41%; USDA loans also need no down and work with DTI near 43%.

For pure cash‑flow underwriting, bank‑statement loans accept 10% down and price 0.5 - 0.8% above conventional rates, while asset‑based or hard‑money loans may charge 1% + points but close quickly.

• Example: A self‑employed borrower with a 620 FICO score uses an FHA loan eligibility guide, puts down 3.5%, and receives a rate 0.5% higher than a 740‑score conventional loan.
• Example: The same borrower qualifies for a VA loan with zero down, paying only 0.3% more than the conventional benchmark because the VA program ignores the low FICO in favor of service history.
• Example: A USDA loan lets the borrower buy in a rural area with no down and a rate 0.4% above the conventional baseline, provided the property meets income limits.
• Example: If the borrower prefers a faster, income‑only review, a 12‑month bank‑statement loan with 10% down adds roughly 0.7% to the base rate but sidesteps the low FICO entirely.

Each pathway trades lower down‑payment or quicker approval for a modest increase in rate, letting self‑employed applicants secure financing despite a low FICO score.

If you have a thin credit file, lenders typically charge a higher mortgage rate. A thin file means few or recent tradelines, so the Fair Isaac Corporation (FICO) score offers limited predictive power and the loan is viewed as riskier.

Lenders compensate by adding anywhere from 30 to 70 basis points to the base rate you saw in the 'expect these basis‑point gaps by your FICO band' section, or by requiring a larger down payment (often 20 %). Some may use a proxy score such as a FICO 5 or alternative data, but the net effect is a pricier loan  a href='https://www.consumerfinance.gov/about-us/blog/how-thin-credit-files-affect-mortgage-rates/' >thin‑file mortgage pricing explained by the CFPB.

Improving the file - adding a secured credit card, paying utilities on time, or waiting 6‑12 months for more history - can shave those extra basis points. In the next section we'll look at how self‑employed borrowers with low FICO scores can still find competitive options.