Buying a home is one of the biggest financial decisions most people will make, and your credit score plays a crucial role in whether you get approved for a mortgage—and at what rate. A higher credit score can open the door to better loan options, lower interest rates, and long-term savings. If you’re planning to buy a home in the near future, it’s important to take steps now to improve your credit score.

In this guide, we’ll cover what lenders look for, why your credit score matters, and actionable strategies to improve credit for home buying.

Why Your Credit Score Matters for Home Buying

When you apply for a mortgage, lenders assess your credit score to gauge your reliability as a borrower. Your score reflects your history of managing debt, from credit cards to student loans. A strong credit profile shows lenders that you are less likely to default, which often translates into more favorable terms.

For example, a borrower with a 760 credit score could secure a 30-year mortgage with an interest rate that’s half a percentage point lower than someone with a 660 score. Over the life of the loan, this difference can save tens of thousands of dollars.

What Lenders Look At

Mortgage lenders typically review:

  • Credit Score: A three-digit number summarizing your credit history.
  • Payment History: Record of on-time vs. late payments.
  • Credit Utilization Ratio: Percentage of available credit you’re using.
  • Length of Credit History: How long you’ve had active credit accounts.
  • Types of Credit: Mix of revolving accounts (credit cards) and installment loans (auto, personal, student).
  • Recent Credit Inquiries: How many new accounts you’ve applied for.

Knowing these factors allows you to target specific areas for improvement.

Step-by-Step Ways to Improve Credit for Home Buying

1. Review Your Credit Report

Start by requesting free copies of your credit reports from the three major bureaus—Experian, Equifax, and TransUnion—at AnnualCreditReport.com. Check for errors, outdated information, or accounts that don’t belong to you, and dispute them promptly.

Why it matters: Even small errors can lower your score and increase your mortgage costs.

2. Pay Bills on Time, Every Time

Your payment history accounts for about 35% of your credit score. Setting up automatic payments or reminders ensures you never miss a due date.

Pro tip: If you’ve missed payments in the past, focus on making all future payments on time to gradually improve your score.

3. Lower Your Credit Utilization Ratio

Aim to use less than 30% of your available credit across all credit cards. For example, if your total limit is $10,000, keep your balance below $3,000.

Action step: Make extra payments mid-cycle or ask for a credit limit increase to instantly lower utilization.

4. Avoid Opening New Credit Accounts

Each application for credit can trigger a hard inquiry, which may slightly reduce your score. In the months before applying for a mortgage, avoid taking on new debt unless absolutely necessary.

5. Keep Older Accounts Open

The length of your credit history impacts your score. Closing old accounts shortens your credit history and may reduce your score. If possible, keep long-standing accounts open, even if you use them sparingly.

6. Diversify Your Credit Mix

If you only have credit cards, consider adding an installment loan, such as a small personal loan or a credit-builder loan. This can demonstrate your ability to manage different types of debt.

How Long Does It Take to Improve Credit?

While some improvements—like disputing errors—can yield quick results, most meaningful credit score increases happen gradually. Expect to spend at least three to six months implementing changes before seeing significant re sults. For those with major credit challenges, it may take a year or more.

The Bottom Line: Prepare Early for Home Buying Success

Improving your credit score before applying for a mortgage isn’t just about getting approved—it’s about unlocking better financial opportunities. By taking proactive steps to address weak spots in your credit profile, you can position yourself for lower interest rates, smaller monthly payments, and greater long-term savings.

Next Step with Lendgo:
Ready to shop for a mortgage? Lendgo can connect you with top lenders who match your financial profile—helping you find the best rates and terms available.