Credit Score of 720 – Can I Get a Mortgage Loan?

Reader Question: “I recently checked my credit scores from all three bureaus, and found that I have an average of 720 points. I want to buy a home later this year. Can I get a mortgage loan with a 720 credit score, or should I try to improve it before applying for loans?”

Let me start with the short answer, and then we can build on that. In most cases, a credit score of 720 is enough to get approved for a mortgage. But you probably won’t qualify for the lender’s best interest rates with that score. Additionally, the lender will look at other key factors when considering you for a loan. Your credit score is important — but it’s not everything.

720 Won’t Get You the Best Rates

If you want to qualify for the best interest rates a lender has to offer, you’ll probably need a score of 760 or higher. Of course, none of this is written in stone, and the guidelines are constantly changing. But based on everything I’ve heard and read over the last few months, a credit score of 720 will not get you the best rates. That doesn’t mean you can’t get a mortgage with that score — you probably can. It just means the lender will assign a higher rate on the loan.

A Higher Credit Score Will Save You Money

So the question becomes — should you buy a house now or wait until your score improves? This is a question only you can answer, and it presumes that your credit score will actually improve. What if it stays the same? What if it drops? If you are serious about increasing your score, and you are taking the necessary actions to do so, then it might be wise to wait.

For example, if you can boost your 720 credit score to 770 or so, you could qualify for a lower interest rate. This means a smaller mortgage payment each month as well, and it could save you thousands of dollars over the life of the loan.

Other Criteria for Mortgage Qualification

I’ve answered a lot of home buyer questions over the years, and one of the things I’ve realized is that most people put too much emphasis on credit scores. They see them as the be-all and end-all of mortgage qualification. But there are other important factors as well. A mortgage lender will also review the amount of debt you are carrying (relative to your income), and that alone is enough to make or break the loan.

That’s why it’s nearly impossible for me to say if a 720 credit score is good enough to get a loan. There are many other variables at work, so it’s not a yes or no question. It’s the kind of question that can only have on answer — “it depends.”

My advice is to go ahead and apply for a mortgage loan. You won’t have any obligation just by applying, and you’ll quickly find out where you stand in terms of credit score and other qualifying factors. A lot of home buyers reach this point and get cold feet. But there’s no reason to be nervous about this step in the process. It’s necessary, and it’s easy. You can even get quotes online these days.

Learn more: This article addresses the topic of a 720 credit score, as it applies to the home buying process. You can learn more about this subject in the credit section of our website.