Your credit score influences more than just loan approvals — it affects the interest rate you're offered, which directly changes your monthly payment and total cost over the life of a mortgage. If your score isn't where you want it, the good news is that credit is improvable. It just takes some patience and the right habits.
Know Where You Actually Stand
You can't improve what you haven't measured. Pull your credit reports from all three bureaus — Equifax, Experian, and TransUnion — at AnnualCreditReport.com, which is the official free source. Review each one carefully. Errors are more common than people expect, and disputing inaccurate information is one of the fastest ways to see a score change.
Payment History Is the Biggest Factor
The most important thing you can do for your credit is pay every bill on time, every month. Payment history typically makes up the largest share of your score. If you've had late payments in the past, they fade in impact over time — but only if you build a consistent record of on-time payments going forward. Set up automatic payments for at least the minimum on every account so nothing slips through.
Keep Credit Card Balances Low
Credit utilization — the ratio of your balance to your available credit limit — is the second-biggest factor in most scoring models. Carrying a high balance relative to your limit signals financial strain to lenders, even if you pay it off each month. As a general guideline, keeping any single card's balance below 30% of its limit is a reasonable target. Lower is better.
Be Strategic About New Credit
Every time you apply for new credit, a hard inquiry appears on your report, which can cause a small, temporary dip in your score. Opening several new accounts in a short window also lowers the average age of your credit history, which matters too. In the months before applying for a mortgage, avoid opening new accounts unless it's truly necessary.
Keep Old Accounts Open
Closing a credit card you don't use might feel tidy, but it can reduce your total available credit and shorten your average account age — both of which can hurt your score. In most cases, keeping older accounts open (even if you rarely use them) is the better move.
Address Outstanding Collections Carefully
If you have accounts in collections, the situation is nuanced. Paying a collection doesn't always remove it from your report immediately, and strategy matters. Talk to a mortgage professional or a credit counselor before making payments on old collection accounts — the approach can affect your score and your loan eligibility.
Wondering how your credit score affects your mortgage options? Talk to First Look Home Loans — we work with buyers at all stages of their credit journey.
