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 magnifying glass , pen , and a model house are on a wooden table representing a chart.

REALTORS® Confidence Index

March 28, 2025
The Market Outlook from the REALTORS® Confidence Index for sellers increased compared to last month.
A homeowners association document is sitting on a wooden table next to a pen and a book.

Homeowners Associations

March 28, 2025
In many housing markets, homeowners associations (HOAs) and other community associations can be a part of the homebuying (and owning) experience. Here’s what prospective buyers should know:
A woman is kneeling down in front of a house holding a sign that says home for sale.

Marketing Your Home

March 28, 2025
Once you decide to sell your home, your agent will work with you to determine the best strategy to reach potential buyers and attract strong offers. Here are some considerations when marketing your home:
A wooden house with the words property tax written on it

Property Taxes

March 28, 2025
Wherever you buy a home in the United States, property taxes are a reality of homeownership. An agent who is a REALTOR® can help connect you with a tax expert in your area, but here are the basics:
A man is holding a sold sign in front of a house.

Navigating Multiple Offers

March 28, 2025
When your home is on the market, you may receive offers from multiple interested buyers. Offers can vary greatly, and you will need to determine which one is best for you. Here's what sellers should know:
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:
Show More
Share by: