When it comes to buying a home, your credit score isn’t just a number, it’s one of the most influential factors shaping the interest rate you’re offered. A higher credit score can save you hundreds of dollars a month and tens of thousands of dollars over the life of your loan, while a lower score can make homeownership more expensive than it needs to be.  In fact, some studies focusing on the gap between excellent credit (760+) and very poor credit (below 600) estimate $200,000–$400,000+ in excess interest over a lifetime, especially if including multiple large loans like mortgages and autos.

As a mortgage loan officer, I’m well-versed in factors that shape your credit score and I’ve seen how a few strategic steps can dramatically improve a buyer’s mortgage options. Whether you’re planning to purchase or refinance soon or simply prepping for the future, here’s how to strengthen your credit score and unlock better mortgage rates.

1. Know Where You Stand: Check Your Credit Reports

Before you can improve your credit, you need to understand what’s helping (or hurting) it.
You’re entitled to a free credit report annually from each of the three major bureaus: Experian, Equifax, and TransUnion.

What to look for:

• Errors or incorrect accounts
• Old debts that should have fallen off
• Duplicate accounts
• Incorrect personal information

Disputing inaccuracies can give your score a quick boost.

2. The Weight of Each Factor (FICO Mortgage Model)

• Payment history: 35%
• Amounts owed (credit utilization): 30%
• Length of credit history: 15%
• New credit inquiries: 10%
• Credit mix: 10%

The fastest wins almost always come from the top two categories (payment history and credit utilization).

3. Pay Down Credit Card Balances

Your credit utilization ratio – the percentage of credit you’re using compared to what’s available with the credit limit – is a major component of your score.

Aim for:

• Below 30% utilization
• Ideally 10% or lower for the best results

Even paying down a single credit card significantly below its limit can improve your score quickly.

4. Make All Payments on Time

Payment history makes up the largest portion of your credit score. If you tend to miss due dates, setting up automatic payments or due-date reminders can protect your score.

Just one late payment can drop your score dramatically, especially if your credit history isn’t very long.

5. Avoid Opening New Credit Accounts

Every new credit inquiry can temporarily lower your score. In fact, each hard inquiry can cost you 5-15 points each! Unless absolutely necessary, avoid opening credit cards, financing furniture, or signing up for new loans while preparing for a mortgage. Even if the store card offers a discount, it’s not worth the potential impact on your mortgage rate.

6. Keep Old Accounts Open

Even if you’re not using an account regularly, closing it could hurt your score by lowering your available credit and shortening your credit history. If you have older cards, keep them open and active by charging something small once every few months.

7. Strategically Tackle Collections or Charge-Offs

Not all collections are treated equally. In some cases, paying off a collection can help your score; in others, it may reset the reporting date and temporarily hurt it. Before paying off old debts, talk with a mortgage professional who can help you evaluate the best strategy for your situation.

8. Become an Authorized User

If you have a family member with:

• A long credit history
• Low utilization
• On-time payments

You may benefit from being added as an authorized user on their credit card. This strategy can help build credit quickly, just make sure the card reports to all three bureaus.

9. Give Yourself Time

Credit improvement doesn’t happen overnight, but even 30 to 90 days of consistent, smart financial behavior can create meaningful changes. If you want the best possible rate when applying for a mortgage, start working on your credit long before you’re under contract.

To bring this all together, here is how I generally advise my customers who have poorer credit and want to fix it.  I’m not a credit expert and I certainly believe in getting their help; however, I do have access to multiple credit simulators that offer guidance toward achieving your goals.  Here are the 3 main steps I generally give – in order of greatest impact first:

1. Bring any account that is currently late (more than 30 days past due) current.

2. Once everything is current, start working to pay down balances – even if it’s just one credit card at a time.  Work until you have all your revolving credit account (such as credit cards) balances to less than 30% of their credit limits.  Once you accomplish that goal, then work toward 10% or less for maximum benefit.

3. After I have reviewed the collection accounts and previously charged-off accounts, then work on those.  NOTE: when working with any collection/charged-off accounts, the ideal goal is to get the creditor or their credit agency to REMOVE the credit line completely from your credit report.  Having an account that shows it was in collections but is now paid off does not help you get nearly the points you would if the account simply disappeared from your credit history.   Some creditors may refuse to remove an account, and that’s okay; it’s still better to reach a settlement agreement with them and pay it, to at least show you have fully addressed the account and have taken responsibility for your previous loans.  That helps any lender feel more comfortable.

4. Never close any open accounts.

5. Simply be patient – don’t worry if you don’t have the funds to do it all right now!  Working at a steady pace will absolutely boost your score to new levels, and that will save YOU the $200,000 – $400,000 over the course of life!

Final Thoughts

Improving your credit score is one of the most powerful ways to secure a lower mortgage rate and save money long-term. With the right strategy and the right guidance, you can position yourself for a smoother homebuying experience and more affordable monthly payments.

If you’re thinking about buying a home in the near future and want to review your credit profile, I’d be happy to walk you through your options and create a personalized plan.

Call or text me at (214) 542-4095 or email Rob@TeamRobHomeLoans.com anytime – I’m here to help you get mortgage-ready and confident in your next move.