Skip to main content

Boosting Credit Score Before Mortgage

Your credit score plays a significant role in determining whether or not your mortgage application is approved, especially when it comes to competitive interest rates and loan terms. However, many potential homebuyers may not realize that their credit history can also affect the overall affordability of a mortgage. To boost your credit score before applying for a mortgage, follow these steps:

Understanding Credit Scores​

Credit scores are calculated based on various factors such as payment history (35%), amounts owed (30%), length of credit history (15%), new credit inquiries (10%), and credit mix (10%). The higher the credit score, the better your chances of qualifying for a mortgage at competitive interest rates.

Factors That Can Affect Credit Scores​

  • Payment History: Late or missed payments can significantly lower your credit score.
  • Credit Utilization Ratio: High levels of debt in relation to available credit limits can negatively impact your credit score.
  • Length of Credit History: Established credit accounts can help improve your credit score by showing a longer history of responsible borrowing and repayment.

Strategies for Boosting Credit Scores​

  1. Review Your Reports: Check your credit reports for errors or inaccuracies that could be impacting your score.
  2. Improve Payment History: Make all payments on time, every time, to ensure your payment history is accurate and reflects positive behavior.
  3. Reduce Debt: Work towards reducing high-interest debt by paying off debts as quickly as possible.
  4. Maintain Good Credit Utilization Ratio: Keep the amount of credit you use low compared to the total amount available.

How Long Does It Take To See Improvement?​

Credit scores can be improved over time, but the process is faster and more effective when implemented consistently. Generally, it takes at least 6 months to a year for significant improvements in your credit score, assuming you follow good practices consistently.

Tips For Homebuyers​

If you're planning to apply for a mortgage soon, consider starting to boost your credit scores as early as possible to enjoy better terms on your loan.