The higher your credit score is the less of a risk you are to a mortgage lender, or pretty much any lender for that matter. When you have obtained a credit score that is above 700 you will find that you will qualify for most of the programs that are available out there. The 720 credit score mark will qualify you for a few more programs and once you are over 750 you will qualify for almost anything out there. Borrowers with credit scores above 800 are very far and few between, but these are basically " the cream of the crop" borrowers, and present the least risk level to lenders.
When you have 700 fico, 800 fico, 720 fico, high credit scores, you are in a great position to get the lowest going rate. Of course there are other factors but 700 fico, 800 fico, 720 fico, high credit scores is a great factor to have when shopping for a great rate.
If you have a credit FICO score over 700 you will receive a reduced rate from the lender because you are seen as less of a risk. The distribution of FICO credit scores is: 800+ 13%, 750-799 27%, 700-749 18%, 650-699 15%, 600-649 12%, under 599 15%.
Higher credit scores can also qualify one for simpler processing when scored through an automated underwriting engine. The benefits include less documentation requirements for full documentaion loans and even a lower appraisal fee.
Banks evaluate a mortgage applicant's credit worthiness base primarily on 3 criteria; credit profile, sufficient income, and ample assets in the form of down payment and reserves. With an excellent credit profile and credit scores over 720, an applicant can often get approved for a mortgage even with less income and little assets.
Managing credit responsibly is key to maintaining a high credit score. Maintaining a high credit score allows consumers to obtain better rates on loans and other borrowed credit. A recent study found that consumers with scores less than 660 had a significantly higher incidence of late payments as well as higher debt usage than those consumers with scores of 720 or greater.
This is considered "A Paper" credit.
Higher scores would be required for various situations like high loan amounts that are the millions of dollars.
Having a high credit score will allow you to not only get a lower interest rate, but also give you access to programs that you may not otherwise qualify for. For example 100% financing on second homes, or investment properties are typically programs that have very high credit standards to qualify.
A high credit score will also qualify you for stated income and no doc loan programs. This will ease some of the burden of sorting through paperwork to bring to your loan officer.
"A Paper" lending is not to be confused with Conventional Lending. Simply, the higher the credit score the less likely of a credit risk, the less likely the credit risk, the more likely you will be offered the lowest interest rates.
Applying for a mortgage with a credit score of 700 or above unlocks a variety of possibilities, including the option to not document your income or assets or even your employment (a No Doc or NINA mortgage), or to qualify for aggressive "cash flow" minimum payment option loans. Payments for conventional 30 year fixed and interest only mortgages are also significantly lower for borrowers with credit scores of 700 and above.
Having scores this high will open up more different loan programs to you and allow lenders to give greater discounts on pricing.
As mentioned above, having a score above 700 will also greatly help if you are looking to invest in Real Estate. Lenders generally have stricter requirements for buying investment properties. If your score is over 700, over 720 is even better, then you will be able to buy investment property with less money down and get the best rates available.