What you need to do to improve your credit for a mortgage

Lenders look at your credit score and credit history to decide whether to give you a mortgage and what interest rate to charge. A higher score usually means a lower rate, which saves you tens of thousands of dollars over the life of the loan. The steps that raise your score — paying bills on time, lowering the amount you owe, and fixing errors on your report — take months or years, not weeks. Starting now, even if you don't plan to buy for a year or two, gives you time to see real improvement.

Your credit score comes from three main credit bureaus: Equifax, Experian, and TransUnion. Each one keeps a separate file on you, and lenders may check one, two, or all three. The most common mortgage score is the FICO score, which ranges from 300 to 850. Most lenders want to see a score of at least 620 to approve a mortgage, though 740 or higher usually gets you better terms.

Key Takeaways

  • Check your credit report from all three bureaus (Equifax, Experian, TransUnion) at annualcreditreport.com for free, and dispute any errors you find before you start other repairs.
  • Paying your bills on time every month is the single biggest factor in your score — even one late payment can drop it 100 points or more.
  • Lowering the amount you owe, especially on credit cards, raises your score faster than waiting for accounts to age.
  • Mortgage lenders typically want to see a score of at least 620, though 740 or higher gets you better interest rates and terms.
  • Credit repair takes three to six months to show real movement, and major damage like foreclosure or bankruptcy stays on your report for seven to ten years.

Get your credit report and fix errors first

Before you do anything else, pull your credit report from all three bureaus. Go to annualcreditreport.com, which is the official site run by the three bureaus themselves. You can get one free report from each bureau every 12 months. Do not use a third-party site that promises a "free" report — most of them sign you up for a paid monitoring service.

Read through each report carefully. Look for accounts you don't recognize, late payments that weren't actually late, or accounts that show as open when you closed them. These errors happen more often than you'd think — a payment posted to the wrong account, a name mix-up, or an old account that wasn't removed. If you find an error, write to the bureau in writing (email works, but a letter creates a paper trail). Include a copy of the report, circle the error, and explain why it's wrong. The bureau has 30 days to investigate and respond. If they confirm the error, they remove it from your report.

Fixing errors can raise your score by 50 to 100 points or more if the error was serious — like a late payment that wasn't yours or an account you never opened. Even if you don't find major errors, this step is worth doing because it clears away noise before you start the real work.

Pay every bill on time, starting now

Payment history makes up 35 percent of your FICO score — the largest single factor. One late payment can drop your score 100 points or more, depending on how late it was and how high your score was to begin with. A payment 30 days late hurts less than one 90 days late, but both damage your score. The damage fades over time, but the late payment stays on your report for seven years.

Set up automatic payments for at least the minimum due on every account — credit cards, car loans, student loans, utilities, phone bills, everything. If you can't afford the minimum, call the lender and ask about hardship programs or payment plans before you miss a payment. Missing a payment is worse than calling ahead. Once you've set up automatic payments, you have a clean slate to build from. Every month you pay on time adds to your score.

If you have missed payments in the past, they still hurt your score, but the damage decreases as time passes. A late payment from two years ago hurts less than one from two months ago. This is why starting now matters — you want recent history to show on-time payments, not recent late payments.

Lower the amount you owe, especially on credit cards

The amount you owe compared to your credit limit is called your credit utilization ratio. If you have a $5,000 credit limit and owe $4,500, your utilization is 90 percent. Lenders see high utilization as a sign you're stretched thin. Keeping utilization below 30 percent — ideally below 10 percent — raises your score noticeably.

Credit card debt hurts your score more than other debt because credit cards are revolving accounts. Paying down a credit card from $4,500 to $1,500 can raise your score 50 to 150 points in a month or two. Paying down a car loan or student loan helps, but the effect is slower because those are installment accounts with a fixed payoff date.

If you have multiple credit cards, focus on the ones with the highest utilization first. If one card is maxed out and another has room, move the balance to the one with room (if you can do it without a balance transfer fee that's too high). Paying down is better than moving the balance around, but moving is better than doing nothing. Once you've lowered utilization, keep it low — don't close the card or run it back up.

Don't close old accounts or open new ones

The age of your accounts matters. Older accounts show a longer history of managing credit, which raises your score. Closing an old account shortens your average account age and can drop your score 10 to 50 points. If you've paid off an old credit card, leave it open and use it occasionally — buy something small and pay it off the next month. This keeps the account active without running up a balance.

Opening new accounts also hurts your score in two ways. First, a new account lowers your average age. Second, explore for credit triggers a hard inquiry, which drops your score a few points. Multiple hard inquiries in a short time (like explore for three credit cards in a month) signal that you're desperate for credit, which lowers your score more. If you need to open new accounts, space them out and do it early in your credit repair timeline, not right before you explore for a mortgage.

Understand how long repairs take and what lenders see

Credit repair is not fast. Paying down debt takes months. Building a history of on-time payments takes months. Negative items aging off your report takes years. Most people see a 50 to 100 point improvement in three to six months if they're paying down debt and making all payments on time. Bigger improvements take longer.

Serious damage stays on your report for a long time. A late payment stays for seven years. A foreclosure or bankruptcy stays for seven to ten years. A collection account stays for seven years from the date you first missed the payment that led to the collection. These items hurt your score less as they age, but they don't disappear until the seven or ten years are up.

When you explore for a mortgage, the lender pulls your credit report and score. They also look at your debt-to-income ratio — how much you owe compared to how much you earn. Even if your score is 740, if you owe $50,000 in student loans and $20,000 in credit cards and you make $60,000 a year, a lender may not approve you or may offer you a smaller loan. Paying down debt helps both your score and your debt-to-income ratio.

Consider a secured credit card if you have no credit history

If you have no credit history or very little, a secured credit card can help you build a score from scratch. You put down a cash deposit — usually $500 to $2,500 — and the card issuer gives you a credit limit equal to that deposit. You use the card like a normal credit card, and the issuer reports your payments to the credit bureaus. After six to 18 months of on-time payments, many issuers convert the card to a regular unsecured card and return your deposit.

A secured card is not a quick fix, but it's a real tool if you have no credit file at all. The card costs money in annual fees (usually $25 to $100), so only use it if you actually need to build credit. Don't open multiple secured cards at once — one is enough, and multiple applications hurt your score.

Frequently Asked Questions

How much does my credit score need to be to get a mortgage?

Most lenders require a score of at least 620, though some require 640 or 660. A score of 740 or higher usually gets you the best interest rates. Your score is only one factor — lenders also look at your income, debt, and down payment. A lower score may still get you approved, but at a higher interest rate.

Will paying off collections or old debts raise my score?

Paying off a collection account stops new damage, but the account stays on your report for seven years. Paying it off may raise your score slightly, but not as much as paying down current debt. Some lenders want to see that old debts are paid before they approve a mortgage, so it's worth doing even if the score boost is small.

How long does it take to see my score go up?

You may see movement in 30 to 60 days if you're paying down credit card debt or making on-time payments. Bigger improvements take three to six months. The credit bureaus update your report monthly, so changes don't show up when ready. Check your score every few months, not every week.

Should I use a credit repair company?

No. Credit repair companies charge hundreds or thousands of dollars to do things you can do yourself for free — dispute errors and pay down debt. Legitimate credit repair takes time; any company that promises fast results is misleading you. You can dispute errors yourself by writing to the bureaus, and you can pay down debt on your own.

What if I have a bankruptcy or foreclosure on my report?

A bankruptcy or foreclosure stays on your report for seven to ten years, but the damage to your score decreases over time. You can still build your score by paying all current bills on time and lowering debt. Some lenders will approve a mortgage three to five years after a bankruptcy if your recent history is clean, though the interest rate will be higher.