Credit Infocenter

Increase Your Credit Score Before Applying for a Mortgage Loan

By: Staff

Last Updated: September 25, 2017

If you have been sidelined from buying a house, you are not the only one. After the real estate market crash of 2008, a lot of homeowners either lost their homes in foreclosure or were so upside down in their loan vs house value that they could not even think about selling their home to buy another one. It does seem as though the housing market is coming back, so this might be a good time to think about jumping in to buying a house. If you have not reviewed your credit reports in a while, you may be in for a surprise and buying a house might not happen as quick as you think. Here are some tips on getting ready to apply for a mortgage and ways to increase your credit score in preparation of getting a good interest rate on a home loan.

Review and Carefully Analyze Your Credit Reports

If you have not pulled your credit reports in quite a while, then we suggest you go to and pull your credit from all three credit bureaus. You are able to request your reports for free once a year. If you have used this service within the last year, you will have to use one of the other services, like or one of our recommended companies and you will have to pay for them. If you also want to see your credit score, there may be an additional charge or you might have to sign up for a monitoring service. It is worth it if you want to make sure your score is increasing as you are working on fixing your credit.

Now that you have your credit reports in your hand, go over them very carefully and look for any items that are inaccurate and look for information that isn't verifiable. Remember, the credit bureaus have to be able to verify the information on your credit report and if they can't, it has to come off. For more information on disputing these items, read our articles on how to repair your credit.

Pay Your Bills On Time

Remember that your payment history accounts for 35 percent of your FICO credit score and current balances have much greater weight on your score than older entries. Bottom line, it is very important to pay your bills on time months before you are even thinking about applying for a home loan. 

The next piece of that puzzle is paying down the money you owe. If you can, start using extra cash you have on hand and pay down or pay off all of your credit card balances. Do not close these accounts, just get the balances as close to zero as you can. If you don't have any extra cash, see if you can borrow some money from a friend or family member — that way this "loan" won't appear on your credit report. If you can't get a loan that way, try getting a loan from peer-to-peer lender. We have heard from some readers that some P2P loans did not show up on their credit reports, but we suggest you find out firsthand from the lender if they report to the credit bureaus or not.

Consider Other Ways to Boost Your Credit Score

Some people approach people they are very close to and ask them to add them to their existing credit card account. As long as that person's credit account has been open for two years or more and they add you as joint or co-owner, you'll see a fast bump in your credit score. Of course this approach exposes both you and your friend to risk, so take this step very carefully.

There are many other ways to give your credit score a boost. Our article entitled Build Your Credit has a lot of other ideas on how you can rebuild and build up your credit.

Pay Off Old Debt, But Make a Deal

Once a legitimate negative is placed in your credit file, it only comes off if the creditor or credit bureau wants it off or seven years pass. Before paying off old bills, contact the creditor and tell them you want to pay off the old amount in exchange for a written guarantee they will remove the old negative item from your credit report. This is what we call "pay for delete" and we have devoted an entire article about how to do this correctly and in your favor.

Some creditors will balk at this but since they have the power to put items on your credit report, they have the power to remove them. If they want your account settled badly enough, they will work you.

Be Patient

Fixing your credit and increasing your credit score will take some time so don't be in a rush and then become frustrated when it is not happening fast enough. Give yourself plenty of time to get the results you want before you apply for a home loan. If you are looking to just shave off 10 to 20 points, that may only take a few months. If you have more serious items on your credit and need to increase your score by 50 points or more, that could take a year or more. The take away on this is to not be impatient and rush into buying a property before you have finished all the clean up work. If you take your time and keep at it, your score will be high enough that you will be approved for a loan and better yet, you will get an outstanding interest rate. That alone with save you thousands of dollars a year and will be well worth the wait!