Thinking about buying a home but worried your credit score might hold you back?

This guide covers practical steps on how to improve credit score for mortgage that you can take right now to boost your score.

We’ll walk you through checking and correcting your credit report, managing your debts, and more. Read on to get started.

Key Takeaways

Check Often: Access reports from all 3 credit reporting agencies to identify errors.
Dispute Errors: Address inaccuracies promptly with proper documentation to protect your score.
Make On-Time Payments: Payment history makes up 35% of your FICO score.
Reduce Card Balances: Maintain a utilization ratio under 30%.
Avoid New Credit Applications: Limit hard inquiries before mortgage applications.
Become an Authorized User: Join a responsible person's credit card to inherit positive history.
Keep Old Accounts Open: To preserve credit history length and available credit.
Diversify Your Credit Mix: Show responsible management of various credit types.
Catch Up On Past Due Accounts: Prioritize overdue balances to stop ongoing credit damage.
Credit Builder Loan: Establish a positive payment history with loans designed for credit building.
Secured Credit Card: Use cash-backed cards to build credit safely through reported activity.
Credit Repair Company: Seek professional help for complex issues while avoiding scams.

Credit Scores & Mortgages Explained

Why Your Credit Score Matters for a Mortgage

Your credit score matters a lot for getting a mortgage. Lenders check your score to see if you're trustworthy with money.

A good credit score gets you better loan terms and lower interest rates. You might even pay less up front. A bad score means paying more interest or getting turned down completely.

Different score ranges mean different things.

Scores between 750-850? Excellent you'll get the best deals. Between 700-749? Still good you'll find competitive rates. Below 579? Very risky you probably won't get approved. The minimum credit score needed to buy a house is around 620 for most lenders. [source]

"Having a good credit score is showing to lenders and other company's that you are someone they can trust to honor a contract or to do business with. You want to build up a solid reputation on your credit report and that translates into a good credit score." States, Castleigh Johnson - CEO of My Home Pathway

But if your credit score is lower than that, no need to worry! My Home Pathway can help you boost your score with personalized guidance and proven strategies. Our experts will work with you to develop a custom plan that addresses your specific credit challenges.

Ready to start your journey to homeownership? Take the first step today and let My Home Pathway help you achieve the credit score you need for mortgage approval.

When you know your credit score, you can work on improving it and get more mortgage options.

How Long Does It Take to Improve Your Credit Score?

Improving your credit score takes time, and the duration depends on your specific situation. If the issues arise from a lack of history, you might see improvements in just a few months.

For serious issues like missed payments or bankruptcy, recovery can take several years. Recovering from a missed payment typically takes up to 18 months. Bankruptcy can take over six years to fully recover in terms of your credit score.

The time needed to improve your credit score varies based on why it was initially low.

How To Improve Your Credit Score Fast

This post goes into detail about what to do to improve your credit score fast. Here's a summary of the top 4 tasks:

Dispute Credit Report Errors Immediately
Look at your credit reports and fix any errors you find. Getting wrong late payments removed can bump up your score in just a month.
Pay Off Credit Card Debt
Lower your card balances below 30% of your limits. Your score can jump as soon as your card company reports the lower balance to credit bureaus.
Join Someone's Good Credit Card
Ask a family member who pays on time to add you to their credit card. Their good history can help your score within a month or two.
Add Bill Payments to Your Credit
Use Experian Boost to count your phone, utility and streaming payments toward your credit score. This can add points to your score right away.

1. Check Your Credit Reports Regularly

You can't improve what you can't see.

Checking your credit reports starts your journey to a better credit score. Get them from Equifax, Experian, and TransUnion through AnnualCreditReport.com. Regular checks help you:

Find ways to improve
Guard against identity theft
Fix mistakes that hurt your score

Think of this like a financial checkup - knowing where you stand helps you make smart changes.

Simple Habits for Regular Credit Score Checks

Set a Calendar Reminder
Pick a specific day each month to check your credit score. Mark it on your phone calendar with an alert. Treat this like any important appointment same day, same time every month creates a consistent routine.
Look At Your Credit Score on Payday
Whenever you pay your major monthly bills, make checking your credit score part of that process. Since you're already handling financial matters, adding a quick credit check becomes a natural extension of your money management routine.
Use Credit Monitoring Apps
Download a free credit monitoring app that sends automatic alerts when your score changes. Many banks and credit card companies offer free monitoring services that notify you of important changes without you having to remember to check.
Partner Check-ins
Partner with a spouse, friend, or family member who also wants to monitor their credit. Set up monthly check-in calls where you both review your scores and hold each other accountable.

2. Dispute Credit Report Errors

When you get your reports, look closely for errors.

Errors on your credit report can tank your credit score, making it crucial to dispute any wrong information right away. Tackle problems like wrong late payments fast to stop more damage to your score. Knowing what's in your credit report makes spotting and fighting errors much easier.

When disputing an error, file your case with the credit bureau and back it up with proof. Send dispute letters to both the credit bureau and the company that reported the wrong info.

The Consumer Financial Protection Bureau (CFPB) provides helpful guides and sample letters for fixing credit report problems. Fixing these errors can boost your score quickly, so make this a top priority.

Common Errors on Credit Reports to Watch For:

Credit report mistakes happen more often than you'd think. Here are the most common errors to look for when reviewing your reports:

Wrong Personal Information: Incorrect name spellings, wrong addresses, or mixed up Social Security numbers can link someone else's credit history to yours.
Duplicate Accounts: The same debt listed twice makes your debt load look higher than it really is.
Closed Accounts Shown as Open: Accounts you paid off and closed still appearing active, potentially affecting your credit utilization ratio.
Incorrect Payment Status: On time payments wrongly marked as late or missed can seriously damage your score.
Wrong Credit Limits: Credit limits reported lower than they actually are can make your utilization ratio look worse.
Outdated Information: Negative items staying on your report beyond the legal time limit (usually seven years for most negative marks).
Accounts That Aren't Yours: Loans or credit cards you never opened appearing on your report, which could signal identity theft.

Understanding your rights as a home buyer can make a huge difference in your mortgage journey. Learn more about your rights as a home owner to avoid costly mistakes.

3. Make On-Time Payments

Your payment history shapes your credit score big time. It counts for 35% of your FICO score. [source]

Paying on time shows lenders they can trust you with future loans.

Paying bills on time stands as the most powerful way to boost your credit score. Nothing improves your creditworthiness more effectively.

Late payments stick around on your credit report for up to seven years, hurting your score. Creating a budget helps make sure you have money ready when bills come due.

If you've missed payments, catching up on overdue accounts gradually fixes your credit score, especially when you follow up with on-time payments. Making a plan to handle missed payments, like reaching out to creditors for options, helps rebuild your credit history.

Looking to get pre-approved for a mortgage? Learn what you need to know about the pre-approval process to position yourself for success in the housing market.

4. Reduce Credit Card Balances

Reducing your credit card balances works wonders for your credit score.

Your credit utilization ratio how much credit you use compared to your total limit directly affects your scores.

Try to keep this ratio under 30% for a healthy credit score. [source]
Paying down card balances before your statement closes can lower your reported utilization.
Don't add new charges while paying off debt, or you'll undo your hard work.
Keep older credit accounts open to maintain a good credit utilization ratio.
Closing credit accounts shrinks your overall credit limit, potentially damaging your score.
Focus on lowering balances instead of shutting down accounts.

If you're navigating a challenging real estate market, check out our guide on how to buy a home in a seller's market for strategies that can help you succeed.

How To Pay Down Revolving Account Balances Fast:

Paying down big chunks of debt can quickly improve your credit score.

Focus on cards with the highest interest rates first while making minimum payments on others to save the most money overall.
Use the debt snowball method by paying off smallest balances first to build momentum and motivation.
Make more than minimum payments whenever possible to reduce principal faster and cut down on interest.
Consider balance transfers to cards with 0% introductory APR offers to pause interest accumulation while paying down debt.
Set up automatic payments above the minimum to ensure consistent progress on debt reduction.
Use windfalls wisely by applying tax refunds, work bonuses, or gift money directly to card balances.
Cut unnecessary expenses temporarily and redirect those funds to debt payments.
Try the 50/30/20 budget rule: allocate 50% of income to needs, 30% to wants, and 20% to debt repayment and savings.
Contact creditors to negotiate lower interest rates if you have a good payment history.
Consider debt consolidation through a personal loan with a lower interest rate than your credit cards.
Track your progress with a debt payoff app or spreadsheet to stay motivated as balances decrease.

If you're weighing your housing options, our guide on renting versus buying a home can help you make the right choice for your financial situation.

5. Avoid New Credit Applications

Applying for several new credit accounts in a short time signals risk to lenders.

Hard inquiries typically drop your credit score by less than 5 points for most people. [source]

These inquiries stay on your report for up to two years but only affect your score during the first 12 months.

When shopping for mortgage lenders, inquiries made close together count as just one inquiry, reducing their impact. The idea is to keep your credit score stable in the months leading up to your mortgage application.

6. Become an Authorized User

Being added as an authorized user on a responsible relative's credit card helps build a positive payment history. This can boost your credit score right away.

The credit bureaus typically report the account history within a month or two after you become an authorized user.

Who to Ask:

Family members with excellent credit: Parents, siblings, or other close relatives with long-standing good credit make the best options.
Spouses or partners who maintain high credit scores and responsible payment habits.
Trusted friends with established credit histories, though this should be approached more cautiously than family.

What to Look For:

Long account history: Ideally 2+ years old to maximize the benefit to your credit age.
Perfect or near-perfect payment record: No late or missed payments that could harm your score.
Low credit utilization: Under 30% utilization on the card you'll be added to.
High credit limit: The higher the better, as it helps improve your overall credit utilization ratio.
Regular reporting to all three credit bureaus: Confirm the card issuer reports authorized user activity to Equifax, Experian, and TransUnion.
Clear expectations: Discuss whether you'll receive a physical card and if you're expected to make any payments.

Make sure the account has a good payment history before joining as an authorized user. Also, check that the credit utilization rate stays low. This strategy builds credit quickly and effectively.

7. Keep Old Accounts Open

The length of your credit history impacts your FICO score, making up 15% of the total score. [source]

Credit reporting agencies care about this one. The average age of your credit accounts significantly influences your credit scores. Keeping old, positive accounts open benefits your score.

Closing your oldest credit account can hurt your credit score.

Keeping unused credit cards open maintains a higher total credit limit, helping your utilization ratio.
Requesting a credit limit increase improves your utilization ratio by giving you more available credit.
Use your oldest credit card every few months or set up a small recurring bill on it to keep it active.

Maintaining old credit accounts helps keep a longer credit history, which positively affects credit scores.

8. Diversify Your Credit Mix

Credit mix makes up 10% of your FICO Score, playing a key role in improving your credit score. source]

A strong credit mix typically includes:

Multiple credit cards
An auto loan
Student loans
Retail store card

Building a diverse credit mix usually takes several years. Having various types of credit shows lenders you can manage different kinds of debt responsibly.

9. Catch Up On Past Due Accounts

If you've fallen behind, catching up on past-due payments is essential. While they stay on your report for years, paying them off and following up with consistent on-time payments will help you bounce back.

Contact creditors to discuss payment options for bringing accounts current.
Set up automatic payments to prevent future missed payments.
Send goodwill letters requesting removal of late payment records, especially if you have extenuating circumstances.
Negotiate with creditors for payment plans or settlements on severely delinquent accounts.
Monitor your credit report regularly to verify that paid accounts are correctly updated.

Regularly monitoring credit reports allows you to track the impact of your efforts and ensure accurate reporting of your payment history.

10. Get a Credit Builder Loan

Credit builder loans are designed to help people who have little or no credit history build credit. As such, they do not require good credit for approval and can be a great way to start adding positive history to your credit report. They give you the opportunity to show that you can handle making payments consistently on time.

Where to Get a Credit Builder Loan:

Community banks and credit unions often offer credit builder loans with favorable terms and low fees.
Online lenders like Self and MoneyLion specialize in credit-building products with convenient digital applications.
CDFIs (Community Development Financial Institutions) provide credit builder loans to help underserved communities establish credit.
Local nonprofit organizations sometimes offer credit-building programs with educational components.
Some fintech apps now include credit builder features that function similarly to traditional loans.
Credit card companies occasionally offer secured credit-builder products that report to all three bureaus.
Check with your current bank as they may offer preferential rates to existing customers.

However, do keep in mind that if you fall behind on payments for this loan, it actually will have the opposite effect. So be sure you’re ready for the responsibility before making the commitment on this one.

11. Get a Secured Credit Card

A secured credit card is different from your typical credit card in that it is backed by a cash deposit. This deposit acts as collateral on the account, providing the card issuer with some security in case the cardholder can’t make their payments.

Where to Get a Secured Credit Card:

Major credit card issuers like Capital One, Discover, and Citi offer secured cards with potential upgrade paths to unsecured cards.
Local credit unions typically offer secured cards with lower fees and interest rates than major banks.
Community banks often provide secured credit card options with personalized service.
Online banks feature secured cards with digital applications and management tools.
Regional banks may offer secured cards with terms tailored to local customers.
Financial institutions that specialize in credit building provide secured cards specifically designed for credit improvement.
Your existing bank might offer preferential terms on secured cards for current customers.

Although they work differently from traditional credit cards, as long as you’re making your payments, they can still help improve your credit because the activity is reported to the credit bureaus.

12. Consider Working With a Credit Repair Company

Credit repair companies help identify and fix credit issues using their specialized knowledge of credit laws and bureau processes. They can spot errors you might miss and know exactly what you're legally entitled to request from creditors.

While they simplify the repair process, beware of scams in this industry. Research thoroughly before hiring any company, checking reviews, accreditation, transparent pricing, and avoiding those promising specific score increases or requiring large upfront fees.

Bonus: Build Good Financial Habits

This one is an oldie but a goodie. When it comes to finance, it’s simply a matter of fact that proper budgeting is extremely important to managing your financial well-being.

When you spend more than you have and start falling behind on payments, it’s a slippery slope that can quickly get out of hand to dramatically bring down your credit score.

This is probably the cause for most people’s woes when it comes to unsatisfactory credit scores.

Build a strong habit of paying every bill on time, this has a lasting impact on your credit.
Keep credit card balances below 30% of your credit limits at all times, even if you pay in full monthly.
Check your credit reports every 3-4 months to catch and dispute errors promptly.
Set up automatic payments for at least minimum amounts due to avoid late payments.
Create and follow a monthly budget to ensure bill money is always available.
Avoid applying for new credit in the 6-12 months before applying for a mortgage.
Keep old credit accounts open and active with small recurring charges to maintain credit history length.
Pay down installment loans consistently to demonstrate responsibility with different types of credit.
Save for a larger down payment while improving your credit to qualify for better mortgage terms.
Use banking alerts to monitor account balances and prevent overdrafts.
Establish an emergency fund of 3-6 months of expenses to avoid relying on credit in emergencies.

Make sure you have a defined budget and stick to it religiously. If you splurge here and there, don’t hang it over yourself too much, but you definitely don’t want to make it a habit.

If you find that you struggle to pay your bills on time simply because you can’t remember, you may want to look into setting up automatic bill payments.

Frequently Asked Questions

How long does mortgage pre-approval typically take?

Mortgage pre-approval usually takes about 7 to 10 days. So, if you're planning to buy, it's a good idea to get that process started!

What should a borrower do if their mortgage application is denied?

If your mortgage application gets denied, take a look at the denial letter and your credit report to spot any errors. Fix those issues and address the reasons the lender provided to improve your chances next time.

What is the minimum credit score generally needed for most mortgages?

You usually need a minimum credit score of 580 for most FHA loans. Just keep that in mind when considering your mortgage options!

What is the recommended credit utilization ratio to improve credit scores?

To boost your credit score, aim for a credit utilization ratio below 30%. Keeping your balances low shows lenders you’re good at managing credit!

What type of support does My Home Pathway offer?

My Home Pathway offers free guidance and support to help you navigate homeownership. It’s a great resource if you're looking to buy a home!

Disclaimer: My Home Pathway is a technology-driven risk improvement platform. We are not a mortgage broker or lender and are not representatives of any home loan programs. We are not a credit repair company, HUD-certified counseling agency, or one-on-one home counselor. While we offer mortgage-related services, we are not a bank, non-profit organization, foundation, or real estate agency. We may partner with those organizations to provide content and access related to our services.

The information provided is for educational purposes only and should not be considered credit repair advice or housing counseling services. For credit repair assistance or housing counseling, please consult with appropriate certified professionals or HUD-approved agencies.

13 Tips on How to Improve Credit Score for Mortgage Approval