How to Improve Your Credit Before Applying for a Mortgage
Buying a home is one of the biggest financial decisions you’ll make, and your credit score plays a crucial role in determining whether you get approved for a mortgage—and at what interest rate. The good news? You can take steps on your own to improve your credit for a mortgage, and when needed, a trusted credit repair company like Credit Freedom can provide additional support. Here are the best ways to raise your credit score and set yourself up for home loan approval success.
1. Check Your Credit Report and Fix Any Errors
Your journey to mortgage approval starts with reviewing your credit report. Mistakes like incorrect late payments or accounts that don’t belong to you can hurt your score. You can request a free credit report from AnnualCreditReport.com and dispute any errors with the credit bureaus to ensure your score reflects accurate information. If the process seems overwhelming, a credit repair company can help identify and challenge inaccuracies for you.
2. Pay Down Credit Card Balances
One of the best ways to raise your credit score is by lowering your credit utilization ratio—the percentage of your available credit that you’re using. Ideally, keep your utilization below 30%, but staying under 10% will put you in the best position for a mortgage.
3. Make On-Time Payments Consistently
Your payment history is the biggest factor affecting your credit score. Even one missed payment can lower your score and make lenders question your reliability. Set up automatic payments or calendar reminders to ensure you never miss a due date.
4. Avoid Opening or Closing Credit Accounts
Opening new credit accounts results in hard inquiries, which can temporarily lower your score. Similarly, closing old accounts reduces your total available credit and can negatively impact your credit utilization. Keep your existing accounts open and avoid applying for new credit in the months leading up to your mortgage application.
5. Address Past-Due Accounts and Collections
If you have past-due debts or accounts in collections, it’s crucial to resolve them before applying for a mortgage. You can contact creditors yourself to negotiate payments, or if you’re unsure of the best approach, a credit repair service can help you settle or remove certain negative marks from your report.
6. Reduce Your Debt-to-Income Ratio (DTI)
Lenders consider your debt-to-income (DTI) ratio when reviewing your mortgage application. Lowering your DTI by paying off debts and avoiding new loans can improve your chances of getting approved for a home loan. If your DTI is too high, a credit specialist can help outline the best strategy for reducing debt effectively.
7. Understand Mortgage Credit Score Requirements
Different mortgage types have different credit score requirements:
Conventional Loans: Typically require a score of 620+
FHA Loans: May approve borrowers with scores as low as 500-580
VA Loans: Usually require a score of 580+
USDA Loans: Often require a score of 640+
If your score isn’t high enough for your desired mortgage type, you can work on improving it through the steps above—or seek professional credit repair assistance for faster results.
Take Charge of Your Credit Before Buying a Home
Improving your credit before applying for a mortgage is possible with the right steps and resources. While you can tackle many aspects on your own—like paying down debt and making on-time payments—a credit repair service can provide valuable support when you need expert guidance. If you’re unsure where to start or want faster results, Credit Freedom is here to help. Contact us today for a consultation and take the next step toward homeownership.