Your mortgage credit score is essential when applying for a home loan. It is a clue to the lender of how responsible you are with your finances and how likely you are to pay (or not pay) your mortgage. Lenders are always taking a big risk when approving you for a loan; they want to make sure they'll get their investment back. It can be a win-win situation for both parties if your score is high.
At minimum, you want your mortgage credit score to be 720. Some lenders today have raised that minimum due to the economy and the high rate of foreclosures, but a 720 is still high and a good target point. The higher your score, the lower the interest rate you'll pay. Why? Because you've proven yourself to be credit worthy with a positive history of on-time payments and low balances to your other creditors, and you've maintained that history for a long time, usually at least a few years to have the highest score .
The interest rate is what you're going to pay the lender for allowing you to use their money to pay for your home. If you don't want to overpay, keep your mortgage credit score high. Even if you've organized your current finances to the point where you believe you can afford a home, you're still not done. You have to check your credit report and score and make sure your credit history is also clean and organized.
If you've tripped a few times and let your score drop, you're subject to those higher interest rates. The best thing you can do is to check your credit report at least 3-6 months before applying for a home loan. Time is the greatest factor in determining your score, so the more time you give yourself, the higher you can potentially raise your score just by turning around your credit habits. Depending on where your score is right now, the road to improvement may take just a couple steps or perhaps include a few rocky hills. Either way, the path is free, so start as soon as you can, and be sure to maintain those new positive habits as time goes on: pay your bills on time and in full, and keep your balances low!