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Home Buying a Home

How to Improve Your Credit Score Before Buying a Home

Kimmie Nguyen by Kimmie Nguyen
October 25, 2024
in Buying a Home, Expert advice
Reading Time: 4 mins read
Two people talking to a financial advisor.
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When buying a home, your credit score determines your mortgage rates and loan approval. A higher score can secure better terms and save you thousands over the life of your mortgage. If your credit isn’t where it needs to be, these tips can help you raise it before you start house hunting.

Check Your Credit Report for Errors 

Reviewing your credit report for inaccuracies is the first step to improving your score. Disputing incorrect information—like unfamiliar accounts or late payments listed by mistake—can result in a quick boost.

  • Read: How to Buy a Home When You Have Student Loan Debt

Pay Down Credit Card Balances 

Keeping your credit utilization ratio below 30% of your available credit shows lenders that you can manage debt responsibly. Paying off your balance each month or reducing it as much as possible will improve your score.

Make Payments on Time 

Your payment history makes up 35% of your credit score, so even one missed payment can hurt you. Setting up automatic payments ensures you never miss a due date and helps build a positive credit history.

Avoid Opening New Credit Accounts 

Opening new credit accounts results in hard inquiries on your report, which can temporarily lower your score. It’s best to avoid applying for new loans or credit cards until after your mortgage approval.

Keep Old Credit Accounts Open 

Closing old accounts can shorten your credit history and negatively impact your score. Even if you don’t use them, keeping older accounts open helps build a longer, more reliable credit record.

Diversify Your Credit Mix 

Lenders like to see various credit types, such as credit cards, auto loans, or student loans. A balanced mix shows you can responsibly manage different debt forms over time.

Pay Off Collections and Negotiate Settlements 

If you have debts in collections, paying them off can improve your score, and some creditors may agree to remove the account from your report. Negotiating a pay-for-delete settlement can further help clean up your credit history.

  • Read: Canadian vs. U.S. Mortgage Payments: Why Canada Comes Out on Top

Become an Authorized User 

If someone with a strong credit history adds you as an authorized user on their credit card, their positive payment record will reflect on your report. This strategy can give your score a boost without taking on new debt.

If you’re ready to start the homebuying journey or need help finding a property that fits your goals, give us a call today! One of the experienced agents at Zoocasa will be more than happy to help guide you every step of the way.

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Kimmie Nguyen

Kimmie Nguyen

Kimmie Nguyen is the Data Analyst Assistant at Zoocasa where she plays a pivotal role in intertwining the intricacies of data analysis with the dynamic world of real estate. With a genuine passion for applying scientific insights into the realm of business, Kimmie brings a fresh perspective to the intersection of technology and real estate. Kimmie enjoys uncovering valuable insights in the ever-changing real estate market through the dynamic usage of data trends.

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