How to Improve Your Credit Score Before Buying a Home
Your credit score is one of the most powerful factors in determining how much home you can afford. A 100-point difference can mean 0.5-1% in mortgage rate difference. On a $300,000 loan, that's over $60,000 in additional interest. Here's the truth: you can meaningfully improve your credit score in 3-6 months with the right strategy.
Credit Score Requirements by Loan Type
| Loan Type | Minimum Score | Best Rates At |
|---|---|---|
| FHA | 580 (3.5% down) | 700+ |
| Conventional | 620 | 740+ |
| VA | No official minimum | 620+ recommended |
| USDA | 640 | 680+ |
What Makes Up Your Credit Score
- Payment History (35%) - Most important. One late payment can drop your score 50-100 points
- Credit Utilization (30%) - Keep below 30%, ideally under 10%
- Length of Credit History (15%) - Average age of accounts matters
- Credit Mix (10%) - Different types of credit help
- New Credit (10%) - Recent inquiries and new accounts
Quick Wins (30-60 Days)
Pay down credit card balances - this is the fastest way to improve your score. Dispute errors on your credit report (20% contain mistakes). Become an authorized user on a family member's old, low-utilization card. Request credit limit increases (soft inquiry only).
Medium-Term Strategies (3-6 Months)
Set up autopay for at least minimum payments on every account. Keep old accounts open even if unused. Avoid opening new credit accounts 6 months before mortgage application. Consider a secured credit card if rebuilding from scratch.
Credit Myths Debunked
- Checking your own credit does NOT hurt your score (it's a soft inquiry)
- You do NOT need to carry a balance to build credit
- Closing old cards HURTS your score, not helps it
- Income is NOT part of your credit score
Realistic Timeline Expectations
| Starting Score | 30 Days | 90 Days | 180 Days |
|---|---|---|---|
| 500-550 | +20-40 | +50-80 | +80-120 |
| 550-600 | +15-30 | +40-60 | +60-90 |
| 600-650 | +10-25 | +30-50 | +50-70 |
| 650-700 | +5-15 | +20-35 | +30-50 |
| 700+ | +0-10 | +10-20 | +20-30 |
Key Takeaways
- Payment history and utilization make up 65% of your score
- Paying down credit cards is the fastest improvement method
- 20% of credit reports have errors - check and dispute yours
- Becoming an authorized user can add 20-50+ points
- 6 months of focused effort can improve scores 50-100 points