If You Were Told “No” Because of Credit, Read This

December 15, 2025•3 min read

A lot of buyers and homeowners assume the door is closed if their credit score is below 620. For years, that number has been treated like a hard line in the sand for conventional loans.

Here is the update: in late 2025, the way automated underwriting handles minimum credit score thresholds changed, and that can open the door for some borrowers who previously would not have made it past the first screen. Fannie Mae Selling Guide+2Fannie Mae+2

That does not mean “everyone gets approved.” It does mean the conversation is worth revisiting if you have strong compensating factors.

If you want the official guideline language, start with the Fannie Mae Selling Guide at www.selling-guide.fanniemae.com and Freddie Mac Guide resources at www.guide.freddiemac.com.

What Changed, With Real Dates

Historically, many conventional programs referenced a 620 minimum score as a baseline. Consumer education sources still commonly describe 620 as a typical conventional starting point. NerdWallet

But Fannie Mae updated guidance for Desktop Underwriter (DU). For DU loan casefiles, the Selling Guide now states that a minimum credit score is not required, and DU will assess creditworthiness using its broader risk factor evaluation. Fannie Mae Selling Guide+2Fannie Mae+2

Freddie Mac guidance also reflects that, for certain automated underwriting outcomes, a minimum Indicator Score is not required for Accept Mortgages because Loan Product Advisor (LPA) is making the credit risk determination. Freddie Mac Guide+1

Important nuance: this is not the same as “no credit score needed.” Freddie Mac still requires at least one borrower to have a usable credit score for many transactions, depending on program and purpose. Freddie Mac Guide+1

Why Low Loan to Value Can Be a Big Advantage

In plain English, low loan to value means you have strong equity or a bigger down payment.

That matters because equity is a risk reducer. When you have a lot of cushion, the overall risk profile of the loan can improve, even if your credit score is not where you want it.

This is why we are seeing the most “real world movement” on files that were previously stuck, especially on refinance scenarios where the homeowner has built up equity or bought long enough ago that the loan balance is relatively low compared to value.

What This Could Mean for Refinancing, Including Cash Out

If life happened, and your credit took a hit, you might still want to explore:

A lower rate refinance, if the numbers make sense
A term change refinance to improve monthly cash flow
A cash out refinance in very specific cases, when the overall risk profile is strong

Not every lender will treat these files the same way. Some lenders add their own overlays. Also, pricing can vary significantly when credit is lower. The smartest move is to run a real scenario through automated underwriting and see what comes back.