Raise Your Credit Score Before Starting Your House Hunt

By
Mortgage and Lending with First Heritage Mortgage NMLS #: 938761

Did you know that your credit score is one of the factors that will determine what interest rate you end up with on your mortgage loan? A low score can also keep you from qualifying for a mortgage loan or delay your home pre-approval until you can raise your score. That is why it is important to do everything you can to earn and maintain the highest score possible a year or two out from buying a house. Below I’ve compiled a short list of what to do and what not to do.

teal credit card digits close-up

Do…

  • Make sure you are current on all accounts with no outstanding balances owed.
  • Always pay your bills on time. Late payments will lower your score, and the more recent the late payment is, the more it will lower your score. So, if you’ve had late payments in the past, ideally you will want to put some time between them and buying a house.
  • Keep your balance to limit ratio low on your credit cards.
    • Start with paying all balances below 50% of their limits.
    • Next, work to pay all balances below 30% of their limits.
    • Now, keep them there.
  • Some mortgage advisors, like myself, have access to credit analysis software. This software will review your credit profile and tell you exactly what to do to raise your score the desired point amount. That being said, don’t wait and try to repair your credit on your own before buying a house. I always encourage borrowers to have me review their credit 6-12 months before you plan on starting your house hunt, especially if you know it needs work, so that I can give them a step-by-step plan to follow. Would you try to fix your car, wire your house, or install a new toilet on your own if you aren’t experienced, or would you call a professional to help if their service was FREE? Even if you know your credit is good (in the 700-740 range), wouldn’t you want to know how to get above a 760 before you buy a house to guarantee the lowest possible interest rate when it’s time to lock in?

Do not…

  • Do not pay off old collections or charge-offs until advised to do so by your mortgage advisor. I know it doesn’t make sense, but paying off an account no one is actively trying to collect will update the date of the last account activity and lower your score as a result, even though it is now paid off.
  • Do not close accounts. The longer your account history, the higher your score will be.
  • Do not hire a credit repair company to improve your credit. After a consultation with a mortgage advisor, you can simply follow his/her advice to repair your credit on your own. Also, a mortgage advisor can fix errors on your report for you at no cost. For example, today I had a client with a judgment on his report that actually belonged to his brother as they have similar first names. I was able to submit the online court records directly to the credit bureaus resulting in the judgment being removed in 3 business days.

If you have any questions about qualifying for a mortgage and/or you would like me to review your credit and prepare a personalized plan to help you get ready to buy a home, please contact me. I am licensed to work with borrowers in the entire state of Virginia. I can also refer you to other mortgage advisors I know and trust on the East Coast.

Comments (7)

Rob Marken
Bend River Realty - Bend, OR
25+ years experience in Bend

Great list of dos and don'ts for trying to improve your credit.  I think this information is very helpful for future buyers. 

Apr 03, 2014 01:33 AM
Mike Rankin
ClearPath Mortgage Solutions, Inc. NMLS #1394615 - Albany, NY
Mortgage Consultant

Great post! There's so much invovlved to credit scores and it's so important to properly teach clients how they work.

Apr 03, 2014 02:35 AM
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

Great advice, Whitney Watson.  I wish you were in my area, I would definitely be working with you!

Apr 03, 2014 07:20 AM
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello Whitney,

Great post for consumers to use their credit score to their advantage.

Apr 03, 2014 11:41 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Great advive Whitney.  I'm sure you take very good care of customers and provide wonderful customer service!

Apr 03, 2014 12:47 PM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Whitney, you provide a great service to customers who would like to be home owners in the future.

Apr 07, 2014 12:59 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Whitney, often potential buyers ask how to improve their credit scores, and will bookmark your tips.

Apr 07, 2014 10:41 PM

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