How to Improve Your Credit Score Before Applying for a Mortgage
March 1, 2025
When you're preparing to buy a home, your credit score plays a crucial role in determining your mortgage terms.
A strong credit score can help you secure a lower interest rate, saving you thousands over the life of your loan. If your score needs improvement, don’t worry—there are practical steps you can take to give it a boost.
But first, it’s important to understand that the credit scores you see from your bank, credit card provider, or free credit monitoring apps are not the same scores mortgage lenders use. Mortgage lenders rely on specific FICO® scoring models, which weigh factors differently than consumer credit scores. The most accurate way to see the scores used for home loans is through myFICO.com—though access requires a paid subscription.
Now, let’s dive into ways you can improve your mortgage credit score before applying.
1. Pay Down Debt
One of the key factors in your credit score is your debt-to-credit ratio, also known as credit utilization. Aim to use no more than 30% of your available credit. For example, if you have a $10,000 credit limit across all cards, try to keep your balance under $3,000. Paying down existing debt not only improves your score but also shows lenders you're managing your finances responsibly.
Quick Tip:
Focus on paying off high-interest credit cards first to reduce your overall debt faster.
2. Dispute Errors on Your Credit Report
Errors on your credit report can negatively impact your score. Common mistakes include incorrect account balances, duplicate entries, and accounts that don’t belong to you. Request a free copy of your credit report from the major credit bureaus—Experian, Equifax, and TransUnion—and review it for inaccuracies.
If you find errors, you can file a dispute online. Correcting these mistakes can lead to a significant score improvement.
Quick Tip:
Check your credit report annually to stay on top of potential issues.
3. Pay Your Bills on Time
Your payment history
is the biggest factor
affecting your credit score. Consistently paying your bills on time shows lenders you're reliable. Late payments, even by just a few days, can lower your score and remain on your report for years.
Set up reminders or automatic payments to ensure you never miss a due date.
4. Limit New Credit Applications
Each time you apply for new credit, a hard inquiry
appears on your report, which can temporarily lower your score. Before applying for a mortgage, avoid opening new credit cards or taking out loans unless absolutely necessary.
Quick Tip:
Soft inquiries, such as checking your own credit score, do not affect your score.
5. Don’t Close Old Accounts
The length of your credit history influences your score. Keeping older accounts open can demonstrate a long and stable
credit history, which is favorable to lenders. If you have older credit cards with no balance, consider keeping them active by making small purchases and paying them off monthly.
6. Know Your Mortgage Credit Score
Since the scores mortgage lenders use differ from what you see from your bank or credit card, check your FICO® Mortgage Scores
through myFICO.com
for the most accurate view of where you stand. This ensures you won’t be caught off guard when applying for a loan.
7. Consult a Mortgage Professional
At DNVR Lending, we understand how important your credit score is when applying for a mortgage. Our team can guide you through personalized strategies to improve your credit and secure the best possible mortgage terms.
Boosting your credit score doesn’t happen overnight, but by taking these steps, you can strengthen your financial position and make your homeownership dream a reality.
Ready to take the next step?
Contact DNVR Lending today to learn more about your mortgage options and how we can help you reach your goals.
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