While there’s no quick fix for credit repair, paying bills on time builds your credit score the fastest. You may also see improvements by keeping credit card balances low, becoming an authorized user on someone else’s card, and maintaining diverse credit types. It’s helpful to dispute credit report errors and keep old accounts open to preserve your credit history.
The average credit score for homebuyers has risen to 758. But many loan programs have flexible credit requirements, with an FHA loan starting at a 500 credit score minimum with a 10 percent down payment.
It’s possible to qualify for a mortgage with a lower credit score, but after using these strategies to improve your credit, you might not have to. A better credit score typically unlocks a lower interest rate, reduced fees, and more favorable loan terms, potentially saving you thousands over the life of your mortgage.
What’s the Best Way to Build Credit to Buy a House?
Though steps like paying bills on time and lowering credit utilization can impact a score within a shorter timeframe, results vary based on factors like your starting credit score, reporting schedules of creditors, and the specific scoring model used.
To help boost your score sooner than later, try these strategies:
1. Pay all bills on time.
What it is: Avoiding making late payments helps you establish a positive payment history. This accounts for 35 percent of your credit score and has the biggest impact.
How it’s done:
- Set up calendar or phone reminders for due dates
- Enable automatic payments for payment minimums
- Pay bills a few days before they’re due
- Address any past-due accounts immediately
When you might see results: After 3+ months of consistent on-time payments
2. Pay down credit card balances.
What it is: Paying down balances on credit cards lowers the amount of debt you owe compared to your credit limits. So, aim to use less than 30 percent of your available credit. FICO scoring considers both overall and per-card credit utilization.
How it’s done:
- Make extra payments on high-balance cards
- Get balances below 30 percent of your limits
- Focus on maxed-out cards first
When you might see results: 30-60 days after balances are reported lower
Have questions about your credit? Let us help.
3. Become an authorized user.
What it is: When you’re added as an authorized user to a family member’s credit card account, their good payment history becomes part of your credit report.
How it’s done:
- Ask a family member with good credit to add you onto their account
- Call the credit card company to confirm they report authorized users to credit bureaus
- Decide upfront who will be responsible for all payments
- Your score may improve even if you don’t receive or use the card
When you might see results: As soon as the next statement
4. Dispute credit report errors.
What it is: Finding and fixing mistakes on your credit report can quickly raise your score.
How it’s done:
- Get your free annual credit report from AnnualCreditReport.com
- Review the report and look for accounts you don’t own
- Check for incorrectly reported late payments
- File disputes online with each bureau
When you might see results: 30-45 days after disputes are resolved
5. Maintain diverse credit types.
What it is: Having a mix of different credit accounts, like credit cards, loans, and a mortgage, shows you can handle different types of credit responsibly.
How it’s done:
- Balance revolving accounts (credit cards) with installment loans (auto, student)
- Consider a small personal loan if you only have credit cards
- Keep at least one active credit card even after paying off loans
- Don’t open new accounts just for diversity right before a mortgage application
When you might see results: Within 1 to 3 months of establishing different account types, with full benefit after 6 or more months
6. Request credit limit increases.
What it is: Ask your credit card companies to raise your credit limits. This improves your credit utilization ratio without paying down debt.
How it’s done:
- Contact credit card companies where you’ve been a customer for at least 6 months
- Specifically request a “credit limit increase without a hard credit pull”
- Be prepared to provide updated income information when asked
- Begin with your longest-held accounts, as they’re most likely to approve increases
When you might see results: Within 1 to 2 billing cycles
7. Keep old accounts open.
What it is: Maintaining your oldest credit accounts establishes a long credit history and helps your score.
How it’s done:
- Make small purchases (like gas or groceries) on your oldest cards every few months
- Set calendar reminders to pay these cards in full right after using them
- Keep unused cards in a secure location at home rather than carrying them
- Review all statements monthly, even for rarely used cards, to catch unauthorized charges
When you might see results: Ongoing benefit
8. Avoid hard inquiries.
What it is: Hard inquiries occur when you apply for loans, credit cards, or other financing, and they can lower your credit score by several points each time. Soft inquiries occur when you check your own credit or when companies pre-screen you for offers and have no negative impact on your score.
How it’s done:
- Don’t apply for new credit cards within 6 months of applying for a mortgage
- When someone needs to check your credit, ask if it will be a “hard” or “soft” inquiry
- Complete all mortgage shopping within a 45-day window, when multiple inquiries count as one
When you might see results: Right away by protecting your score from unnecessary drops
Can you buy a house with your current credit score?
Get in touch with your local Cornerstone loan officer to find out.
Sources deemed reliable but not guaranteed. For educational purposes only. Cornerstone Home Lending does not provide credit repair services. Please contact a qualified professional for specific guidance.