If you are a first-time home buyer, having a strong credit score can be a major asset. A good credit score can help you qualify for low mortgage rates, secure more favorable financing terms, and even help you get approved for a mortgage in the first place. In fact, a good credit score is the most important factor when it comes to underwriting a mortgage.

A real-world example of credit score’s importance can be seen in the cost difference between a good and bad score. For instance, someone with a credit score of 760 would pay around 3.918% APR for a 30-year fixed-rate mortgage, while someone with a score of 620 would pay 5.097% APR. That’s about a $326 per month difference in payments, translating to a substantial $118,000 over the life of the loan.

In addition to helping you secure a lower mortgage interest rate, a strong credit score can also provide opportunities to secure a non-conventional loan. Non-conventional lenders may be open to working with buyers who may not qualify under traditional standards, such as those whose incomes are recent or who have a history of income-related issues.