People arrive focused entirely on a three-digit number, usually one they saw on a free app that is not the number a lender sees anyway.
The score matters, but it is a summary. An underwriter opens the full report and reads the detail, and the detail routinely produces a different answer than the score alone would suggest. Two applicants at 620 can be a straightforward approval and an outright decline.
What an underwriter is actually looking for
How recent the damage is. The single most important factor. A missed payment four years ago is history. A missed payment last month is a current problem. Derogatory marks fade in significance long before they fall off the report, and most lenders weight the last twelve to twenty-four months far more heavily than anything older.
Whether it is finished. A collection that has been paid, even recently, reads completely differently from one still outstanding. An unpaid collection is an active refusal to pay. A paid one is a resolved problem. Paying collections rarely improves your score much, and it substantially improves your file.
Whether it was a pattern or an event. Six months of missed payments across every account in 2020, followed by four clean years, tells a story: a job loss, an illness, a separation. Underwriters accept that story readily when it is explained. Scattered late payments every year for a decade tells a different story that no explanation fixes.
What kind of debt went bad. A mortgage or a car loan missed is treated far more seriously than a disputed phone bill in collections. Housing payment history is the closest proxy a lender has for how you will treat this mortgage.
Where your balances sit. Cards near their limits signal distress regardless of payment history. This is also the fastest thing to fix, and it moves a score in weeks rather than years.
The mortgage-specific thresholds
Roughly, and lenders vary.
Insured mortgages generally require 600 or better, with 680 the comfortable threshold for the best pricing. Below 600, insured lending is largely unavailable and you are looking at alternative lenders with twenty percent down or more. Below roughly 500, most alternative lenders also step back and you are into private lending.
Those are guidelines, not rules, and this is exactly where the detail overrides the number. A 590 with one explained event and clean recent history places more easily than a 640 with a current collection. The full band-by-band picture and what each costs is on poor credit and pricing.
The realistic path back
This is the part worth planning, because it is usually shorter than people fear.
Now: pull your own report. From both Equifax and TransUnion, because they hold different information. Free, and it does not affect your score. Errors are common and take thirty to sixty days to correct, so find them early. See reading your report.
Now: settle outstanding collections. Get written confirmation. This changes your file more than it changes your score.
Months one to three: bring balances down. Below thirty percent of each limit, ideally below ten. This is the fastest available score improvement and it can be worth thirty or forty points in two statement cycles.
Months three to twenty-four: two clean trade lines, reporting. This is the requirement lenders repeat most. Two active accounts, paid on time, reporting for at least twelve months and preferably twenty-four. A secured card counts. A small car loan paid on time counts.
Throughout: apply for nothing else. Each application marks the file, and a burst of them looks like distress at exactly the wrong moment.
Buying before the file is repaired
Entirely possible, through an alternative or B lender. Expect a higher rate, a lender fee of around one percent, a shorter term of one or two years, and a requirement for twenty percent down or more.
The way to think about it is as a two-year bridge with a defined exit: place the mortgage now, use those two years to build the clean history above, and refinance to an A lender at renewal. Done deliberately it works well and it gets people into a house years earlier. Done without a plan it becomes an expensive permanent arrangement. See alternative lending and B lenders.
What to avoid
Credit repair companies charging fees to do what you can do yourself for nothing. Nobody can remove accurate information from a credit report, and anyone claiming otherwise is selling something. Disputing accurate entries wastes time; disputing genuine errors is free and effective.
Also avoid opening new credit to boost your file shortly before applying. It lowers your average account age and adds enquiries at the moment you least want them.