There’s a lot to consider when buying a house—especially for first-time home buyers. Because let’s be real, it’s one thing to surf Zillow while dreaming of double vanities and other non-negotiables. It’s another thing entirely to crunch the numbers, talk to a lender, and realize what it takes to actually buy a house.
When it comes down to it, no matter your goals—whether it’s a cozy starter home or room to grow—the first step in the home-buying process is making sure your credit is in good shape. After all, a strong credit history can open the door to better loan options, lower interest rates, and less stress during the approval process.
Here’s how to get your credit mortgage-ready one step at a time.
1. Check Your Credit Report
Before you can improve your credit, you need to know where you stand. So, start by getting a free credit report. You can access a free report (weekly) from each of the three major credit bureaus—Equifax, Experian, and TransUnion—at AnnualCreditReport.com.
Once you’ve got your report, look it over carefully. Make sure everything listed is accurate, complete, and up to date. As you review, pay particular attention to:
- Any missed or late payments
- Your overall credit utilization (how much of your available credit you’re using)
- Old or inactive accounts
- Major events like bankruptcies or court judgments
- The variety of accounts in your credit mix
- Errors or unfamiliar items that could hurt your score
If something doesn’t look right, take steps to dispute or correct it. Even small mistakes can have an impact on your score. If you spot red flags—like high balances or past-due accounts—start addressing them early.
Credit score improvement may take as little as three months or several years, depending on where you’re starting from and the issues that need to be resolved. As you prepare, keep checking your progress. At a minimum, check your credit report annually—especially in the 6 to 12 months before you apply for a mortgage.
Credit Score vs. FICO: What’s the Difference?
You’ll hear both “credit score” and “FICO score” tossed around when you start looking into home loans, but they’re not exactly the same thing.
Credit Score
This is a general term that refers to a number representing your creditworthiness. It’s based on information in your credit report, and it’s used by lenders, landlords, and even insurance companies to assess your risk as a borrower or customer.
There are, however, multiple types of credit scores, and not all are created equal.
FICO Score
FICO is a brand name and one of the most commonly used credit scoring models. Many mortgage lenders use your FICO score to decide whether to approve your loan and what interest rate to offer.
Your FICO score is calculated using data from your credit reports and includes five key factors:
- Payment history
- Amounts owed (credit utilization)
- Length of credit history
- Credit mix
- New credit
So… Which One Matters More?
If you’re planning to apply for a mortgage, check all of your credit scores. While many lenders look to your FICO score (especially for conventional home loans), they will likely pull all three (FICO, Experian, and TransUnion) and use the middle of the three scores.
So, monitoring any version of your credit score can help you stay on track. Just be aware that the score you see on free apps or credit card dashboards might not match your FICO score or the credit assessment model your lender uses.
2. Pay Down High Balances
To assess your creditworthiness, lenders look at how much of your available credit you’re using (and a few other factors). If your credit cards are nearly maxed out, that’s a red flag—even if you always make your payments.
To improve your credit health, try to use less than 30% of your available credit on any one card. And, if you can swing it, aim for under 10%. Every little bit helps.
3. Don’t Skip Payments—Even on Small Stuff
Your payment history accounts for 35% of your FICO score (see left). And, even one missed payment can lower your score and stay on your report for years—so, yes, it’s a big deal. The payment history rule even applies to smaller bills like store credit cards, cell phones, or medical payments (if they get sent to collections). To stay on track, set up reminders or automatic payments.
4. Avoid Big Credit Moves Right Before You Apply
Opening new credit cards or taking out a car loan right before you apply for a mortgage? Not a great idea. That move could temporarily lower your score and make lenders nervous.
Hard inquiries, in particular, can impact your score and may stay on your credit report for two years. These happen when a lender checks your credit as part of a loan or credit card application. Too many in a short period may make you look like a riskier borrower—even if you’re just rate shopping or exploring options.
Basically, if buying a home is in your five-year plan, try to avoid opening new credit accounts, closing old credit cards (which can lower your total available credit), and taking on new debt.
5. Build Your Score with Time and Good Habits
If your credit score needs some work, don’t worry. Buying your first house is a pretty big deal, so take your time and do it right. It’s not uncommon for first-time buyers with fair-to-good credit scores to need six months to a year to get mortgage-ready. So, focus on paying all your bills on time. Keep your credit balances low. Avoid taking on new debt unless absolutely necessary, and (above all) remember that good credit is a marathon, not a sprint.
6. Get Some Help
If managing your debt to get your credit score in check is overwhelming, we’re here to help. Maps members can get free financial coaching through GreenPath to reduce stress and manage debt. They even offer Credit Report Reviews through certified financial counselors that can help you understand your report and identify areas for improvement.
7. Attend a Maps Home Buyers Class
Each quarter, we offer a virtual home-buying class to help first-time buyers navigate the mortgage process. The next class will be held on Wednesday, September 17, at 5:30 pm—and it’s FREE to attend.
In the meantime, our friendly mortgage team is here to guide you through the homebuying process and help you build a plan. Whether you’re ready to start house-hunting or just starting to think about it, we’ll help you take the right steps toward your future home.
Buying a Home Is a Big Step—So, Take Your Time
Your credit score doesn’t have to be perfect to buy a home, but the better your score, the more options you’ll have. If you’re not quite there yet, don’t worry. Taking the time to prepare now can help you avoid costly missteps later (like locking yourself into a mortgage that stretches your budget). Each smart step you take today moves you closer to your goal. Along the way, if you want to talk with a real person about your mortgage plans, stop by your local branch or reach out to our lending team online. We’re ready when you are.
Want more home buying tips?
- Check out our mortgage glossary for all the terms you’ll need to know when buying your dream house.
- Find out what a HELOC is (and how to use one).
- Learn the basic steps you should take before selling your home.