A lot of what people believe about credit scores and mortgages isn’t quite right, and some of the most common credit score myths can actually work against you right when it matters most. Believing the wrong one at the wrong time, like right before applying for a mortgage, can cost you a better rate or delay your approval altogether. Here are the credit score myths we hear most often from buyers, and what’s actually true.
Myth: You Need a 750+ Credit Score to Buy a Home
This is one of the most common credit score myths, and it stops a lot of would-be buyers before they ever start. In reality, conventional loans are generally available with scores starting around 620, and FHA loans can go as low as 580, with some programs allowing even lower scores with a larger down payment. A higher score gets you better pricing, but it is not a gatekeeper the way this myth suggests.
Myth: Checking Your Own Credit Hurts Your Score
Checking your own credit report or score, sometimes called a soft inquiry, does not affect your score at all. This particular credit score myth keeps people from reviewing their own reports, which means errors and outdated information go unnoticed for years. A hard inquiry, the kind that happens when a lender pulls your credit for an actual application, can cause a small, temporary dip. Checking your own credit is not the same thing, and you should do it regularly.
Myth: Paying Off All Debt Right Before Applying Always Helps
Paying down debt is usually a good idea, but the timing and the type of debt matter more than this myth suggests. Paying off an installment loan, like a car loan, can sometimes lower your score temporarily by shortening your credit history mix. Paying down revolving credit card balances, on the other hand, generally helps your score by lowering your credit utilization. The safest move is to talk with your mortgage planner before making large payoffs close to your application, so the timing works in your favor instead of against it.
Myth: Closing Old Credit Cards Improves Your Score
This is one of the more damaging credit score myths for homebuyers. Closing a credit card, especially an older one, can shorten your average credit history and reduce your available credit, both of which can lower your score. Even if you don’t use an old card regularly, keeping it open with a zero or low balance is usually better for your credit profile than closing it.
Myth: Carrying a Balance Builds Credit
Some people believe you need to carry a small balance on your credit cards month to month to build credit. This is false, and it can cost you money in interest for no benefit. What actually matters is your credit utilization, the percentage of your available credit you’re using, not whether you carry a balance. Paying your statement in full each month builds credit just as effectively, without the interest charges.
Myth: All Credit Scores Are the Same
Buyers are often surprised to learn that the score they see through a free credit monitoring app is not always the same score a mortgage lender pulls. Mortgage lenders typically use specific mortgage-scoring models, and they usually pull scores from all three credit bureaus, using the middle score to qualify you. This is one of the credit score myths that catches people off guard when their mortgage pre-approval shows a different number than what they expected.
Myth: A Lower Score Means an Automatic Denial
A credit score below what you were hoping for does not automatically mean denial. Loan programs like FHA are specifically designed to work with a wider range of credit profiles, and compensating factors, such as a larger down payment, strong reserves, or a lower debt-to-income ratio, can offset a lower score. The real answer depends on your full financial picture, not one number in isolation.
What Does Mortgage Pre-Approval Really Mean? →
Mortgage Planner’s Perspective on Credit Score Myths
At Texas Mortgage Plan, we’ve found that credit score myths cause more unnecessary stress for buyers than actual credit problems do. A number on a screen doesn’t tell the whole story. The right approach is understanding your full credit picture early, ideally months before you plan to buy, so any real issues can be addressed and any myths can be set aside before they cost you time or a better rate.
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FREQUENTLY ASKED QUESTIONS
Q: What credit score do I need to buy a house?
A: Conventional loans are generally available starting around a 620 credit score, and FHA loans can go as low as 580, with some programs allowing lower scores when paired with a larger down payment. Higher scores typically unlock better interest rate pricing, but there is no single universal minimum across all loan programs.
Q: Does checking my own credit score lower it?
A: No. Checking your own credit report or score is considered a soft inquiry and does not affect your credit score. Only hard inquiries, like those from an actual loan or credit card application, can cause a small, temporary dip.
Q: Should I pay off all my debt before applying for a mortgage?
A: Not necessarily, and not without a plan. Paying down revolving credit card balances generally helps your score, but paying off certain installment loans can sometimes lower it temporarily. It’s worth reviewing your specific accounts with a mortgage planner before making large payoffs right before applying.
Q: Will closing an old credit card help my credit score?
A: Usually not. Closing an old account can shorten your credit history and reduce your available credit, both of which can lower your score. It’s generally better to keep older accounts open, even with a zero balance.
Q: Why is the credit score my lender pulled different from the one I see on a free app?
A: Mortgage lenders typically use specific mortgage-scoring models and pull scores from all three credit bureaus, using the middle score to qualify you. Free credit monitoring apps often show a different scoring model, which is why the numbers don’t always match.
Texas Mortgage Plan – 50+ years of combined mortgage experience, serving homeowners and homebuyers across Flower Mound and the DFW Metroplex. Elizabeth Rose, NMLS 252686, CDLP® Certified Divorce Lending Professional | Shea Patton, Mortgage Advisor, NMLS #251397, Licensed Realtor. Texas Mortgage Plan is a d/b/a of Legacy Mortgage, NMLS #1759275 | Equal Housing Lender