Credit scores signify your trustworthiness to financial institutions and can determine how easy, or how expensive, it is for you to get a mortgage. To determine your ability to pay, lenders look at your score and they prefer you to have "good" or "excellent" credit — to the point that having "excellent" credit can save you thousands of dollars, according to financial website NerdWallet.
A score of 750 to 850 is considered "excellent"; a score of 700 to 749 is considered "good"; a score of 650 to 699 is "fair"; and a score of 300 to 649 is "poor." Scores range from 300 to 850 based on major scoring systems FICO and VantageScore.
"If somebody has a high score, what that shows us is that they've been good on meeting their obligations, whether it be credit cards, car loans or other home loans," Brian Hoovler, branch operations assistant manager at Bay Equity Home Loans, tells NerdWallet. "It means we're more likely to want to give you a loan, because we know you're going to pay us back."
While it's up to the lender to determine the specific interest-rate parameters attached to your loan, the difference of a few points on your credit score could add up in a big way. If your score falls below 700, you could end up paying a lot more.