How to Improve Your Credit to Get Mortgage Ready

Lenders will nearly always review your credit when you apply for a mortgage. That’s because they want to know what kind of a risk they’re taking in lending to you. A better credit score can lead to lower mortgage rates and better loan offers, which may lower your monthly payment and save you thousands of dollars over the years. 

Learn how your credit affects mortgage approval and find out how to improve your credit score to buy a house with these home-buying tips. 

How your credit impacts the mortgage process

Your credit score tells lenders what kind of borrower you are. Do you pay your bills on time, or do you miss payments now and again? Are your credit cards maxed out, or do you have plenty of breathing room?  

The average homebuyer has a credit score of 758, according to Fannie Mae. A good credit score typically falls in the 670 to 739 range. Credit scores ranging from 740 to 799 are considered “very good” and scores of 800 and above are viewed by lenders as “exceptional.” 

A good credit score can help you get a lender’s best rates. If your score is low, you may not be able to borrow as much, and your rates will likely be higher. 

Below are AmeriSave’s minimum score requirements for various types of home loans to help you get mortgage-ready: 

• Conventional: 640 
• FHA: 500  
• Jumbo: 620-660 
• VA: 500 

How to get your credit ready to buy a home

Your score doesn’t have to be perfect, and different lenders have different standards. But boosting your credit score can help you buy a more expensive house, get a better rate on your loan, and save more money in the long run. 

If you’re interested in improving your credit to buy a house, try the following steps. 

1. Check your credit report

As you’re getting ready for a mortgage, begin by checking your credit report so you know where you stand. 

Obtaining your credit report is easy. Per federal law, you are entitled to a free credit report every year from each of the three credit reporting bureaus (Equifax®, Experian™, and TransUnion®). Go to AnnualCreditReport.com and make the request. 

Credit reports may contain inaccurate information that could be dragging down your score. If you find an error, such as an account being reported as open when it’s closed, get in touch with the appropriate credit bureau, as well as the company that provided the inaccurate information. They’ll investigate and correct the error if needed, and that correction could potentially raise your score. 

2. Pay your bills on time

As you prepare to start the mortgage process, take special care to pay all your bills on time. Timely payments make up the biggest part of your credit score (35%, according to FICO), so it’s important none of your payments are late or missing. It’s OK if you only make the minimum payment as long as you pay by the due date. 

3. Pay down existing debt

If you can afford to make more than the minimum payment on your debts, it could help improve your credit to buy a house. Set aside extra money to go toward debt, even if it’s just a small amount. Use part of your tax return or a bonus to pay off debt faster. Set up automatic payments if you can, so you’re not tempted to skip.  

Reducing your existing debt will reduce your debt-to-income ratio (DTI) — the total of your monthly debt payments divided by your monthly gross income. The higher your ratio, the bigger risk you are to a mortgage lender because you’re less likely to be able to pay your monthly mortgage bill. 

Paying down debt reduces what payments you’ll have beyond your monthly mortgage. It also lowers your DTI and shows your lender you have the room in your budget for a new home loan. 

4. Set a budget

A solid budget isn’t just about cutting expenses — it’s about creating a plan that turns homeownership from a dream into a reality. Start by tracking your income and expenses to see where your money goes. Then, prioritize lowering your DTI, saving for a down payment, and improving your credit score to buy a house.  

By sticking to a well-planned budget, you may be able to pay down high-interest debt or save for a bigger down payment, both of which may help you qualify for lower interest rates and better home loan options. Look into one of the popular budgeting apps or keep it simple with a spreadsheet tracking your monthly income and expenses. 

5. Don’t take on new debt

Don’t take on any new debt before or during the mortgage process. That includes applying for any new credit cards, car loans, or personal loans. Each application you submit to a potential creditor creates credit inquiries that could temporarily lower your score, making it harder to get ready for a mortgage. 

6. Don’t overutilize your credit

Keep your credit card balances low, no matter how high your credit limit is. A good rule of thumb is to keep your credit utilization ratio — what you’ve used compared to your credit line — under 30%. For instance, if you have a credit card with a $1,500 limit, you wouldn’t want to spend more than $450 at any given time.  

If you can afford to pay off your credit cards in full every month, do so. That can help boost your score and help lenders see you as a financially responsible borrower. 

7. Build credit history and keep old accounts open

While you generally want to stay clear of adding new debt, there’s one exception: If you have no credit or a limited credit history. Building a credit history is important if you plan on purchasing a home with a mortgage. The older your credit history, the better, so start building. Secured credit cards and small personal loans are good starting places for younger or first-time homebuyers. And if you have credit card accounts you don’t regularly use, keep them open instead of closing them. Keeping an open line of credit that is underutilized can make your credit utilization look better in the eyes of a lender. 

8. Consolidate your high-interest debt

Consider taking out a debt consolidation loan, which can combine your debts into one single monthly payment. Debt consolidation can be helpful for those struggling to keep up with numerous lines of credit. If you consolidate your debt at least six to 12 months before applying for a mortgage, it might help improve your credit score. This loan type may have a lower interest rate, too. 

Keep in mind, however, that applying for a debt consolidation loan will result in a hard inquiry on your credit report, which can drop your score a bit in the short term. 

Want to learn more? Get started with AmeriSave today.  

9. Consider credit counseling

If managing your credit feels overwhelming, it may help to know there are free or low-cost services that can help. Look for non-profit credit counseling companies that can help create a plan to improve your financial health and get your credit ready to buy a home. The National Foundation for Credit Counseling (NFCC) website can help you find certified credit counselors in your area. 

How long does it take to improve your credit score?

Improving your credit score to buy a house doesn’t happen overnight, but with the right steps, you can see progress in a few months. Small changes — like making on-time payments and reducing your credit card balances — can start boosting your score in 30 to 60 days. If you’re tackling bigger issues, like late payments or high credit utilization, it may be up to 12 months before you see noticeable improvement. 

If you’re facing serious credit challenges, such as collections or bankruptcies, rebuilding can take more than a year. The key is consistency — paying bills on time, keeping balances low, and avoiding new debt.  

Get mortgage–ready with AmeriSave

Getting ready for a mortgage? Get preapproved with AmeriSave. A preapproval lets you know how much you could qualify for and what your rate might be. That can be a big help when you’re preparing your finances, especially if you’re considering whether you need to improve your credit.  

Learn more about how to find the right loans to buy a home with tools and resources from AmeriSave. 

Frequently asked questions

How can I quickly improve my credit score?

The time it takes to improve your score will vary depending on your specific situation. However, you can start right away by creating a budget, making timely payments on your bills, and finding extra dollars to throw toward debt. Follow these steps and you may start to see improvements in just a few months. 

How do I get prepared to buy a house?

It’s smart to get ready for a new home and the changes it will bring. Some things you can do to get prepared for a mortgage include checking your credit report, paying down debt, and building your savings for expenses like your down payment and closing costs.