What is the impact of a credit score on mortgage approval?

A higher credit score generally serves as a strong indicator of a borrower’s creditworthiness, which significantly impacts the likelihood of mortgage approval. Lenders use credit scores to assess the risk associated with lending money. When a borrower has a higher credit score, it suggests a history of responsible credit management, including timely payments and low credit utilization. As a result, lenders are more inclined to approve the mortgage application because they perceive a lower risk of default.

Moreover, approval is just one aspect; a higher credit score can also lead to more favorable loan terms, including lower interest rates. This reduction in the interest rate can save borrowers substantial amounts over the life of the loan, making home ownership more affordable and accessible.

In contrast, the other options inaccurately represent the relationship between credit scores and mortgage approval. A lower credit score can lead to reduced chances of approval or higher interest rates, making option B incorrect. Similarly, options C and D overlook the fundamental role that credit scores play in both approval rates and the terms of the loans offered to borrowers. Overall, a strong credit score is a key determinant in the mortgage lending process.