According to the study‘s methodology, the analysis “combines publicly available data with modeled scenarios to estimate the financial benefit of raising a credit score to 760, and how long that improvement might take.”
Variation across states
Across most states, it takes 18 to 36 months to raise an average FICO score to the 760 prime threshold, assuming an improvement of about 20 points per year. Mississippi and Louisiana require the longest timelines, with borrowers needing 4 years and 3.5 years of consistent progress, respectively.
At the opposite end, Minnesota offers the fastest path, with an average timeline of just 0.9 years, due to a high statewide average score of 742. Wisconsin, Vermont and New Hampshire also have relatively short timelines, all below 1.2 years.
Most other states fall in the middle range, including Florida at 2.65 years and Texas at 3.25 years.
While the 760 credit-score threshold for the best mortgage rates is consistent nationwide, the financial impact of reaching that level varies widely by state.
In California, for example, borrowers who raise their score to 760 could save roughly $42,753 over the life of a 30-year loan. In Texas, savings reach about $26,881, but borrowers face one of the highest proportional penalties for scores below 760, exceeding 10% of the total loan amount.
Nationwide, borrowers can save between $10,000 and $46,000 in mortgage interest by improving their credit to 760. States with higher median home values see the largest absolute-dollar savings. Hawaii has the largest potential savings nationwide, with the study finding that borrowers who improve to a 760+ score could save up to $46,206.
Hawaii was followed by California and Massachusetts, with savings of $42,753 and $36,022, respectively. At the opposite end of the spectrum, borrowers in West Virginia could save $9,547.
In high-cost states such as Hawaii and California, the savings from a 760 score can equal more than 40% of annual household income.
Alabama, Mississippi, Georgia, Louisiana and Texas, meanwhile, carry the steepest proportional rate penalties for sub-760 borrowers.
“This data reinforces just how central credit preparation is to homebuying affordability,” said Max Slyusarchuk, CEO of AD Mortgage. “Two borrowers with similar incomes can experience dramatically different buying power depending on their credit score and the state in which they purchase. Even a 20- or 30-point difference in FICO can mean tens of thousands of dollars over the life of a mortgage.”
The study combined publicly available data with modeled scenarios, including estimated timelines for improving scores, differences in 30-year mortgage interest payments, and the impact of credit on affordability relative to state household incomes.
All calculations assume a 30-year fixed-rate mortgage with a 15% down payment based on state median home prices, the study noted.
