If your credit score is on the low side, then lenders assume that you will be less likely to pay them back on time. They will either charge you a higher interest rate or possibly even turn your credit application down altogether.
If your credit score is in the high range, then you probably will be able to get the loan at better interest rates. This is true for all types of credit, including mortgages. Getting a lower interest rate on your mortgage can not only save you hundreds of dollars a year, but will also save you thousands of dollars over the lifetime of the loan. It is therefore to your advantage when pursuing a mortgage loan to have the highest credit score possible.
Sometimes you’ll hear or read about something that is called a FICO score. What is a FICO score? In the financial industry, the most well known rating score is generally referred to as a FICO score, named after the Fair Isaac Corporation which initially developed this rating system. Each credit reporting agency uses this scoring model, but each has its own name for the credit scores it uses, as was mentioned above. Equifax uses the Beacon model, TransUnion the Emperica model, and Experian the Fair Isaac model.