How is Your Credit Score?

Your credit score plays a big role in qualifying for a home loan—and the better your score, the more options you’ll likely have. Whether you’re planning to buy soon or just getting started, here are some helpful tips to improve your credit and strengthen your buying power:

• Make all of your payments on time. Payment history is one of the most important factors in your credit score. Even one missed payment can hurt your score, so set reminders or automate payments when possible.

• Bring all past due accounts current. If you’ve fallen behind, catching up on those accounts is a key first step. A current account status helps restore your credit profile and shows lenders you’re getting back on track.

• Keep credit card balances at or below 30% of your credit limit. High balances can negatively impact your score, even if you make payments on time. Keeping usage low shows responsible credit management.

• Don’t close older credit card accounts. Length of credit history is a factor in your score, so keeping older accounts open (even if you don’t use them often) can help your credit profile.

• Refrain from applying for new credit. Each new application results in a hard inquiry, which can temporarily lower your score. Too many inquiries in a short time can raise red flags for lenders.

• Avoid large purchases before or during the home buying process. Big purchases can increase your debt-to-income ratio and alter your credit profile, both of which can affect your mortgage approval and loan terms.

Taking these steps can make a meaningful difference in your credit score and help you feel more confident when it’s time to apply for a home loan.

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