Mortgage rates have been camped out around 6.5% for months now, and if your credit score isn't at least 740, lenders are going to charge you even more than that. We're talking tens of thousands of dollars more over the life of your loan, for the crime of having a credit history that's merely pretty good instead of very good. Welcome to the American housing market, where the gap between fine and excellent will cost you a new car.
The Number You Actually Need to Know
CBS News put the question directly to lending experts: what credit score gets you the best mortgage rates right now? The answer is 740, minimum. That's the floor of what FICO calls the "very good" range, and it's the point where lenders stop quietly punishing you for not being financially perfect.
For context, the average American borrower had a 713 credit score last year. Decent. Respectable, even. Also, apparently not good enough to get the best deals on the biggest financial transaction most people will ever make in their lives.
Darrin Seppinni, president of HomeLife Mortgage, told CBS News that pricing typically improves at the 740 mark, again at 760, and keeps getting better from there depending on the loan program and your down payment. So yes, the system is tiered, and yes, every tier below the top one costs you more money.
The Price Tag on a So-So Credit Score
Here is the number that should make your stomach drop a little. According to mortgage technology provider Optimal Blue, borrowers with a 740 credit score or higher were getting an average rate of 6.4% on a 30-year conventional mortgage in early July. Borrowers with scores between 680 and 699 were getting 6.84%.
That sounds like a rounding error. It is not a rounding error. On a $300,000 loan, that difference works out to $87 more per month and over $31,000 more in total interest by the time the loan is paid off. Thirty-one thousand dollars. That's a year of college tuition at a state school. That's a decent used car. That's the kind of money that matters.
And look, this isn't a gotcha or a conspiracy. Lenders charge more when they perceive more risk. That's how credit has always worked. But it's worth sitting with the fact that two people buying the exact same house, borrowing the exact same amount of money, can end up in very different financial situations thirty years later just because one of them missed a few credit card payments in their twenties.
Fannie and Freddie Did Something Interesting
There is actually a piece of genuinely good news buried in all of this. As CBS News reports, Fannie Mae and Freddie Mac removed their minimum FICO score requirement in November 2025. That's a bigger deal than it sounds.
James Perfilio, a home loan specialist at Churchill Mortgage, told CBS News his clients have been excited about it since the change took effect. The old system essentially used your credit score as a hard pass-fail threshold. Now, automated underwriting systems are looking at the whole picture: how consistently you've paid debts, what your balances look like, whether a rough patch in your credit history was a pattern or just a rough patch.
Kathy Herig, senior vice president of credit policy at LoanDepot, put it plainly to CBS News: if you can demonstrate the ability to repay your debts, you're a lower risk, full stop. If you've had problems but appear to be getting your act together, lenders might still work with you, though they'll price in some risk. That means a higher rate, but it also means a door that used to be shut is now at least cracked open.
How to Actually Fix This Before You Buy
The good news, if you're sitting at a 700 or a 710 right now, is that credit scores can move faster than most people realize. The most powerful lever, according to Seppinni in his interview with CBS News, is paying down credit card balances. Specifically, you want your total balance across all cards to sit below 30% of your total available credit. Lower is better.
Herig told CBS News that paying off smaller debts in full tends to move the needle faster than chipping away at larger ones. Clearing a revolving debt entirely can trigger a noticeable score bump, and it reduces the debt load that mortgage lenders calculate when figuring out whether you can afford the monthly payment.
There's also a trick called a rapid rescore. If you've made positive changes, your lender can request that credit bureaus update your score in a matter of days instead of the usual one to two months. It's not magic, but if you're close to a threshold and have recently paid something down, it could get you across the line before you lock in a rate.
What To Do If Your Credit Score Is Just Not Getting There
If 740 genuinely isn't happening anytime soon, you're not out of options. CBS News lays out a few alternatives worth knowing. Buying mortgage points lets you pay upfront to permanently lower your interest rate. Whether that makes financial sense depends on how long you plan to stay in the house, but for long-term owners it can add up to real savings.
Shorter loan terms, like a 15-year mortgage instead of a 30-year, typically come with lower rates by default, though obviously the monthly payments are higher. Adjustable-rate mortgages offer lower initial rates if you're confident you'll move or refinance before the rate adjusts.
And then there's the simplest advice, which Herig offered to CBS News: shop around. She says consumers do not compare rates and loan terms enough, and that means they often pay more than they have to. Lenders compete for business, and the rate you get quoted first is rarely the best rate you could have gotten. Call around. Run the numbers. This is a thirty-year commitment. It's worth an afternoon.
The Dingo Take
The federal government spent the last several years lighting the housing market on fire, and now mortgage rates are sitting at 6.5% while the Fed shrugs and the bond market does whatever it wants. That's the context for all of this. The advice about credit scores is real and useful and people should follow it. But let's not pretend the system is functioning the way it's supposed to when a 740 credit score is considered a precondition for getting a fair deal on the biggest purchase of your life.
The Fannie Mae and Freddie Mac changes are genuinely interesting and probably underreported. Moving away from a hard FICO cutoff toward a more holistic view of someone's financial history is, on paper, a smarter way to assess risk. It could help people who got hammered by medical debt or a job loss but have otherwise been responsible. Whether lenders actually apply that flexibility charitably in practice, rather than just using it as a reason to charge more people more money, is a question worth watching.
The bottom line is this: the housing market is punishing everyone who isn't wealthy enough to have a perfect credit history, a large down payment, and the financial cushion to wait for better rates. That's not news. That's just Tuesday in America. But knowing the specific number, 740, knowing what it costs you if you fall short, and knowing the levers you can pull to get there faster, that's actually actionable. So fix your credit score, pay off that card, get the rapid rescore, and then spend an afternoon calling lenders until someone gives you a number you can live with. Not exactly the American Dream they promised you, but it's what's on offer.
