Logo
December 27, 2023

Get Ready to Buy a Home by Improving Your Credit Score

If the idea of buying a home is on your mind for the new year, there are many things you’ll need to consider on your journey. By setting your goal now, you begin laying the groundwork for homeownership. The first step to prepare you is building your credit score.

a purple background with pink arrows pointing upwards

Eligibility

Lenders review your credit to assess your eligibility to borrow money, your ability to make payments and pay back debts, and more. Your credit score is also a factor in determining your mortgage rate. As CNBC explains:


When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage rate, which determines the amount of interest you’ll pay over the life of the loan.[1]


Your credit score may feel ever more important to your homebuying plans since mortgage rates are a key factor in affordability.


Credit

According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770.[2] But that doesn’t mean your credit score has to be perfect. An article from Business Insider explains how your FICO score range can make an impact:


You don’t need a perfect credit score to buy a house… Aiming to get your credit score in the ‘Good’ range (670 to 739) would be a great start towards qualifying for a mortgage. But if you’re wanting to qualify for the lowest rates, try to get your score within the ‘Very Good’ range (740 to 799).[3]

a man is handing a stack of money to another man .

Working with a trusted lender is the best way to get more information on your credit score could factor into your home loan and the mortgage rate. As FICO says:


While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.[4]

a man and a woman are sitting on a couch looking at papers

Improving

If you’re looking for ways to improve your score, Experian highlights some of the things you might want to focus on[1]:


  • Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
  • Your Debt Amount (relative to your Credit Limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible – under 30% utilization is best.
  • Credit Applications: If you’re looking to buy something, don’t apply for additional credit. When you apply for new credit, it may result in a hard inquiry on your credit that can temporarily drop your score.


A lender will help you navigate the process from start to finish, from assessing which range your score falls in to telling you more about the specifics for each loan type.


As you set your goal to buy a home in 2024, focus on boosting your credit score to help your future mortgage rate. If you want to learn more, speak with a trusted lender.



Related Article: Why Home Prices are Going Up

You may be interested in:

A cardboard box with the words moving day written on it

Innovative Strategies for a Seamless Spring Move: 5 Secrets for Moving Success

April 1, 2024
As spring approaches, many homeowners gearing up to sell their homes face the daunting task of moving. However, with some innovative strategies and the right supplies, you can make the process smoother and more efficient. Here are five tips tailored specifically for home sellers embarking on a spring move:
A magnifying glass is sitting on top of a table next to two small houses.

How Much is My Home Worth in Today’s Market?

April 1, 2024
As spring approaches and the real estate market begins to bloom, homeowners gearing up to sell their homes are undoubtedly eager to secure the best offer possible. The key to achieving this lies in understanding how real estate agents value properties and determine listing prices. Here's a glimpse into the process:
A family stands in front of a house for sale sign

Facts about Closing Costs that Homebuyers Need to Know

April 1, 2024
Before making the decision to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re saving for the down payment for your new home, don’t forget you’ll need to prepare for closing costs too.
a boy is sitting on a man 's shoulders looking at a house.

Maximizing Curb Appeal: Your Ultimate Guide to Selling Your Home in the Spring Market

March 19, 2024
As the spring market approaches, prospective home sellers are gearing up to showcase their properties in the best possible light. One of the most crucial aspects of attracting potential buyers is curb appeal – the first impression your home makes from the street. Here's your comprehensive guide to preparing your home for the spring market and maximizing its curb appeal:
a little girl in a floral dress is running through a sprinkler.

Sprinkler System Success: Step-by-Step Guide

March 19, 2024
Testing a sprinkler system is crucial to ensure proper functionality and efficient irrigation for your lawn and garden. Here's a step-by-step guide on how to test your sprinkler system:
a woman is holding a piggy bank and a sign that says buy rent .

First Apartment Finances: A Beginner’s Guide to Budgeting

March 19, 2024
Stepping into the world of renting your first apartment is an exciting milestone, but it can also be daunting, especially when it comes to figuring out your budget. As a prospective renter who's new to living on your own, establishing a realistic budget is essential for ensuring financial stability and peace of mind. Here's a beginner's guide to help you navigate the process:
a beagle dog is running in the grass with a stick in its mouth .

Home Maintenance Checklist for March

March 1, 2024
Following an annual maintenance routine helps homeowners avoid costly repairs, property damage, and keeps home a happy, healthy, and safe place for family and visitors alike.
a man is piggybacking a woman in a cardboard box

4 Homebuying Mistakes and How to Avoid Them

March 1, 2024
If you’re in the market for a new home, avoid these 4 homebuying mistakes to optimize your experience and set yourself up for success. How do you know if you’re ready to buy? Ask yourself these questions to find out if you’re ready to be a homeowner.
a man in a suit holds a clipboard while standing next to a woman

Get Expert Advice for Your Big Move

March 1, 2024
No matter what stage of life you’re in, buying or selling a home is a big decision. When you’ve made big decisions in the past, what have you done? You’ve probably done some research on your own, and then asked for advice and guidance from someone you consider to be extremely knowledgeable. Big decisions lead to big changes and moving is no exception. There are a lot of factors at play when deciding on new living arrangements. You need insights from experts to help you feel confident and make the right choice.
Show More
Share by: