Your credit score is the mortgage lender, the key factor you will consider when applying for a loan. If you need a score, there are steps you can take to improve it before applying it. Everything you need to know about how to improve your credit score before you buy a home.
Mortgage credit score requirements
These are the minimum credit scores you need to qualify for different types of mortgages.
| Types of loans | Minimum credit score |
|---|---|
| Traditional | 620 |
| jumbo | 700 |
| FHA | 580 (or 500, 10% down) |
| VA | 620 (VAs do not require a minimum credit score, but lenders do) |
| USDA | 640 |
While it is important to meet the minimum requirements, it is best to have the highest possible credit score before applying for a mortgage. In fact, according to April 2025 data from Mortgage Technology Providers Optimal Blue, the average credit score for borrowers to obtain a purchase loan is 737.
How to improve your credit score before getting a mortgage
1. Check your credit report and score
Get a copy of your credit report from each major credit department (Equifax, Experian, Transunion) through AnnualCreditReport.com. These reports provide the information that is used to create a credit score. Make sure you’re not wrong, especially when it comes to late payments or closed accounts. If you find an error, contact the department and object as soon as possible.
2. Pay all invoices on time
One of the most important ways to improve your credit is to keep all your accounts in good condition. If you miss a payment, your credit score can drop, and late payments can remain on the report for up to 7 years. If you are currently late in payments but are still within the grace period, contact your creditor immediately to deal with the situation. If you have late payments on your records, try to pay your records on time and move forward.
3. Reduce your credit card balance
Credit usage is the amount you owe compared to the total credit available and accounts for 30% of your score. The lower the ratio, the better. As a rule of thumb, if your usage rate exceeds 30%, try repaying those balances until you reach that threshold.
4. We ask for an increase in credit limits
Conversely, you usually pay off your balance every month, but if you are often closer to making the most of your card, ask your provider for an increase in your credit limit. Assuming that spending remains at the same level, this will reduce credit utilization.
5. Do not open a new account
When you apply for a new credit, the lender will typically perform a credit check that temporarily lowers your score. Therefore, make sure you don’t open a new credit card account or give out more loans before applying for a mortgage, and during the application and mortgage underwriting process. Similarly, do not close your old account. This can increase utilization and negatively affect your score.
6. Get help from responsible credit users
If you are a young first-time buyer, you may not have a very long credit history. One way to improve your credit and buy a home: Become a certified user with a parent or relative credit card. Key cardholders continue to make payments and benefit from positive payment history.
7. Consider credit counseling
If it helps you manage your debt, consider working with a certified credit counselor. Counselors can set budgets and plan to reduce their balance. Generally, I would like to work with credit counselors related to nonprofit organizations rather than representatives of for-profit debt relief agencies.
What factors determine your FICO credit score?
There are several categories in your credit history that lets you know your current score, some of which affect your score more than others. According to Equifax, one of the leading credit bureaus, the FICO score is determined using a formula that looks like this.
- On-time payment history:35%
- Debt amount: 30%
- Total credit history length:15%
- Number of new accounts:10%
- Types of credits used:10%
Credit Bureaus tend to assign current debts “good debt” and “bad debt” labels. Mortgages and other liabilities that could increase your net worth in the long term are considered good. Other spinning accounts not associated with credit card liabilities and valuable assets are more likely to reduce your FICO score.
Why is a higher credit score beneficial when applying for a mortgage?
The higher your credit score, the more likely you are to get mortgage approval and the higher your mortgage rate. This is because the lender wants to ensure you pay back your payments, and your credit score will help you decide how reliably you will pay back your credit balance in the past.
Even a small difference in mortgage rates affects the overall cost of your monthly payments and loans. For example, let’s say you use Bankrate’s mortgage calculator to buy a $300,000 home with a fixed rate of 6.875% and you’ve reduced it by 3%. Monthly payments are approximately $2,176. With a 7% fixed interest rate, your monthly payment is $2,200. The difference may seem small at first, but over the course of a 30-year mortgage, you will save over $8,000 at a lower fee.
Next steps in the mortgage process
Improve your credit and save for a down payment are two of the biggest steps in preparing to buy a home. Next, you need to:
- Organize your financial documents. Your lender wants evidence of your assets and obligations, including wage stubs, tax returns, statements and more from your bank or other financial accounts.
- I’m going shopping for a loan. Apply for pre-approval with at least three lenders to get the best possible rates and terms on a mortgage.
- Accept the offer at home. After you find the home you like and accept the offer, you can choose a lender and go through the process of officially applying for a mortgage.
- Go through the underwriting process. Once the lender receives the application, we will evaluate all financial information to determine whether to grant final approval for the loan.
- Please close the house. If your application is accepted, you will be signed to acquire ownership of the property and pay the closing fee.
To get more information about the mortgage process, check out our guide on how to get a mortgage.
