Your credit score helps decide whether you qualify for a mortgage and how your loan is priced. It is not fixed, and steady habits can move it in the right direction. Start early if you can.
1. Check your credit reports
You can get free reports from Equifax, Experian and TransUnion at AnnualCreditReport.com. Look for accounts that are not yours, wrong balances and late payments that were reported by mistake. If you find an error, dispute it in writing with the credit bureau.
2. Pay on time, every time
Payment history is the largest part of most credit scores. Set up automatic payments or reminders so that nothing slips.
3. Lower your credit card balances
Using a smaller share of your available credit generally helps your score. Many people aim to stay below 30% of each card limit, and lower is usually better. For example, a $4,000 balance on a $10,000 limit is 40% utilization, and paying it down to $2,000 brings it to 20%.
4. Avoid new credit before you apply
Each application can cause a hard inquiry, and new accounts lower your average account age. Avoid opening new cards, financing a car or taking out new loans in the months before and during your mortgage process.
5. Keep older accounts open
The length of your credit history matters. Closing an old card can reduce your available credit and shorten your history, so think twice before you do it.
6. Reduce other debt
Lenders also look at your debt-to-income ratio, which compares your monthly debt payments with your income. Paying down debts can help both your score and your ratio.
7. Give it time
Fixing errors can help within weeks, but building a stronger history usually takes a few months or longer. No one can promise a specific score increase, so ask a lender early what to focus on.
Every borrower is different. If you would like to talk through your own situation, the MonaLending team is happy to help.
