What's one step you took to improve your credit score before applying for a mortgage? How did improving your score impact your options?

One of the most effective steps I took to improve my credit score before applying for a mortgage was paying down my credit card balances and managing my utilization ratio. Credit utilization refers to the percentage of available credit that you are currently using, and it is a major factor in determining your credit score. For instance, if I had a total credit limit of $10,000 across all my cards and I was carrying a balance of $5,000, that meant my utilization was at 50%. Lenders tend to view that as risky because it suggests you may be over-reliant on credit. To improve my situation, I made it a goal to reduce my balances significantly, bringing my utilization below 30%, and ideally closer to 10%. I created a plan to pay more than the minimum every month, focused extra payments on the card with the highest balance, and avoided adding new purchases while I was preparing for the mortgage application. Within just a few months, my credit score rose noticeably. Since payment history and utilization together make up the largest part of a credit score, keeping balances low showed lenders that I was financially responsible and not overextended. I also made sure to pay all bills on time, because even a single late payment can set back your score for months. The improvement in my credit score directly affected the mortgage options available to me. Mortgage lenders look closely at credit scores to decide not only whether to approve you but also what interest rate to offer. Even a difference of 20-40 points in your score can shift you into a better credit tier. For example, let's say someone with a score of 660 might be offered a 30-year fixed mortgage rate at 7.2%, while someone with a 720 score could get closer to 6.6%. On a $250,000 loan, that difference in rates could lower the monthly payment by over $100 and save more than $35,000 in interest over the life of the loan. By raising my score, I was able to qualify for lower interest rates, which made my monthly payments more affordable and freed up money for other priorities like home repairs, savings, or investments. Improving my credit score gave me peace of mind and confidence during the mortgage process. Instead of worrying about whether I would even be approved or forced into higher-cost options, I could focus on finding the right home and negotiating from a stronger position. A few months of disciplined effort in managing credit can translate into decades of savings and stability.

I personally was house hunting in 2014 prior to becoming a broker. I had a credit score of 680 because I had used credit cards irresponsibly when in college. I knew that the mortgage rates tier quite considerably at certain levels since I had studied it in my finance courses at San Diego State. My action plan was simple but with discipline: I had been using a credit card the most and I paid the balance off, bringing the utilization rate to 85 percent to 15 percent within four months. This alone increased my score 40 points, to 720. The discrepancy was outrageous when I applied loans. At 680 lenders offered me 4.75 percent on a conventional 30 year mortgage with 10 percent down payment. At 720, the same lenders were offering 4.125% down with only 5 percent down. The difference of 0.625% saved me 147 dollars per month on a 350 000 dollar purchase. Throughout the loan we will be saving $53,000 of interest. The most outrageous to my mind was the loan program access. The 680 score would restrict me to having higher down pay options, whereas 720 would provide access to the first time buyer programs and better PMI rates. This experience influenced me in the way I counsel clients nowadays Using less than 30 percent of your credit limit is simple advice everyone has heard but the ideal number is under 10 percent across all cards. Most borrowers are unaware that the individual use of cards is as important as the overall use during the scoring formulas.

Being a financial journalist myself and leading many readers in their financial life decisions, I was also going through this process when thinking about my decision of buying a home. I concentrated on polishing up my credit score by taking care that all my balances remained low on all cards and that my payments were made in time to perfection. Being a freelance writer with a variety of income streams, I scheduled payments to arrive a few days before the payment date creating an ideal payment pattern over a six month period. My score rose by 60 points to 780 and this totally changed the type of mortgage shopping I used to make. Starting with the norms of standard offers in the area of around 3.8% interest rates, it became competitive multis at 3.2%. Mortgage lenders started to offer other benefits such as courtesy waiving of the arrangement fees and big cashback deals. The increased rating unlocked high-ratio loans. Instead of the usual 85% mortgages, lenders had 90% and in some cases even 95% products and thanks to these I could save more money to use towards home improvements and furnishing my new home. Banks reduced their processes by a great margin One lender expedited my approval with all now going on within two weeks. The higher score allowed me to have sincere options to choose between several competing proposals that put me in an advantageous position during negotiations. I could choose the best all round package instead of dealing with whatever was on offer and this is actually a saving of thousands over the mortgage period.

I believe the best thing to do before applying to get a mortgage is to go out and work hard on reducing credit card balances. Pushed below ten percent of the limits and maintained, even splitting payments up payday to payday to maintain low utilization when statements were reported. That was enough to make a score over 700s into 760s where the wholesale lenders have a habit of setting the best pricing ranges available. I explain to client's time and again that good enough credit is not rewarded by lenders. They appreciate attention to the minor details such as balance management and cleaning up any mistakes in reports. By the time an improvement in the rate sheet, mortgage insurances and costs reduced and could access the specialty loan programs offered to investors and self-employed buyers with much better rates. It saved thousands of dollars per 1000 dollars of the initial 400,000 loan in lower monthly payments. Better still it placed me in the position of the lenders vying over my file rather than vice versa.

Paid Off My Smallest Installment Loan First One thing that worked for me was paying off a small $1,600 personal loan that had less than 18 months remaining. Many people focus on credit cards, but I learned that installment loans, especially small ones nearing completion, can disproportionately drag your score due to their balance-to-original-loan ratio. Once I cleared that loan, my score increased in 23 points in less than a month. What most people don't realize is that FICO algorithms love to see loans that are either completely paid off or well below 35% of the original balance. In my case, the loan was at 70% of its original value even after I was making regular payments. That was hurting my mix and my "amounts owed" category. Impact on My Mortgage Terms This worked wonders for me. My loan officer reran my file, and suddenly I qualified for a 5% down conventional loan instead of being pushed toward an FHA loan. That meant no upfront mortgage insurance premium, and I could waive escrows. It gave me negotiation flexibility, and that was the difference in winning my first bid. If you're preparing your credit, don't focus on the significant balances. Clean up the small stuff with short terms that are close to the finish line. You'll be surprised how quickly FICO rewards that.

Julia here, owner of Flowers & Flowers, Inc., a Toronto-based flower shop. Before applying for my mortgage, I made sure my credit score was solid—not just by paying bills on time, but by digging into the smaller "Buy Now, Pay Later" apps tied to my name. What people don't realize is that it's not just big loans that affect your score—small BNPL purchases can, too. These services are convenient, and because they show up as checkout options, you might use them without even thinking. I've done it myself—it's just easier sometimes. But with newer credit models starting to factor in BNPL activity, even those little purchases can matter. So I cleaned up unused accounts and made sure everything else was current. That small step paid off—I ended up with a stronger score, and that helped me qualify for a better mortgage rate. One tip I'd share: check your credit report regularly. It's the easiest way to catch small things—like forgotten accounts or BNPL purchases—that could sneak up and hurt your chances when it matters most.

The most impactful step I took was aggressively paying down my credit card balances to get below 30% utilization across all cards. I had been carrying balances around 60-70% of my credit limits, which was absolutely crushing my score even though I never missed payments. I focused on this because credit utilization accounts for about 30% of your credit score, making it one of the fastest ways to see improvement. Within three months of getting my balances under 30%, and ideally under 10% on my primary cards, my score jumped from around 680 to over 720. That 40-point increase completely transformed my mortgage options. Instead of being limited to FHA loans with higher interest rates and mortgage insurance requirements, I suddenly qualified for conventional loans with significantly better terms. We're talking about the difference between a 6.8% interest rate and a 5.9% rate, which saved me over $200 per month and tens of thousands over the life of the loan. What really surprised me was how this also affected my down payment options. With the improved score, I qualified for programs that required as little as 5% down instead of the 10-20% I was originally looking at. This freed up cash flow for moving expenses and home improvements. Beyond the financial benefits, there's something powerful about walking into a lender's office knowing your credit is solid. You negotiate from a position of strength rather than hoping someone will work with you. That confidence alone made the entire home buying process less stressful and more empowering. The key is being strategic about which balances to pay down first, focus on cards closest to their limits since utilization is calculated per card, not just overall. Dominic Kalvelis We Buy NJ Homes Fast www.webuynjhomesfast.com dominic@webuynjhomesfast.com

Two months before submitting my mortgage application, I hit credit utilization. One card was latching onto approximately 62% of its limit; I paid it down to under 10% of its limit, moved payments to post-purchase (pre-statement) dates, and looked for small credit line increases on two cards just to get utilization down without incurring new debt. I also closed two $0 balance zombie accounts that would occasionally come back to haunt us with random $12-$20 charges. Within sixty days, my mortgage FICO score went up approximately 45 points (from 721 to 766 on the lender pull). That one change put me into a better pricing tier and removed the discount points that the lender originally tried to charge. Although I spent as usual, the timing of the pre-statement payments was the main thing that affected the low balance that the bureaus saw. The situation changed quickly: I became eligible for a rate 0.375% lower and a small lender credit, and I was able to ditch PMI earlier due to a stronger score. On a mid-six-figure loan, in other words, that meant about $170/month in savings and interest cost avoided over 30 years. Focus on utilization at your statement close — it's the fastest, most control-laden lever in the lead-up to when you apply.

The best way to boost your credit score before applying for a mortgage is something that I call the "Do Not Disturb" rule. Here, I decided to stop applying for new credit cards and loans at least six months prior to getting involved in the mortgage process. This is because every time you make an application, it counts as a hard inquiry on your report and may reduce your score by 3 to 5 points in total. That may not seem like much, but these points can push you out of one interest rate category and into another when you are trying to finance a big mortgage. Lenders look at multiple inquiries in a short time frame and take it as a sign you are using or relying on extra credit and I wanted to make sure to avoid that perception entirely. When I applied, my score was strong enough for an interest rate nearly half a percent lower than what I would have otherwise qualified for. On a $300,000 mortgage, the difference was nearly $40,000 saved throughout the duration of the loan. This one move put me back in control and on better financial terms.

I asked my credit report to be manually reviewed before submitting my mortgage application to contest a medical collection of $287 that had already been fully paid. Borrowers do not pay much attention to amounts less than $500 since they believe it will not count, but automated systems used by lenders still consider them new delinquencies. Within 30 days that one entry increased my score by 42 points, moving me out of a 689 middle score and to 731. The difference between that was a shift to a better category of risk with no rise in income or savings. The variance in monthly cost was large. The interest rate quoted on a $500,000 mortgage was reduced to 5.75 percent, rather than the previous 6.1 percent, and lowered the monthly payment by approximately $140 each month. In a 30-year timeframe that amounts to almost $50,000 saved, all on fixing a single ignored report item. It established the extent to which the financial planning would be improved in the long run by comparatively minor corrective action.

Having a good credit score is a must especially with interest rates so high right now. The better the credit score you have, the better the APR when applying for a mortgage loan. When first getting started, if you have low or no credit, you should get a secured credit card. After that, the next step is to pay off the loan that you're closest to paying off. There may be a temporary dip in your credit score, but after a while it'll be more beneficial than detrimental. If you're at a point where you can get an unsecured credit card, you should do that. What worked for me is keeping the credit utilization ratio under 5% and paying it all off every month. If you can show consistency in all of these, your credit score should show a noticeable improvement in the next 6 months.

Paid off 90% of my credit card balance and stopped touching it for three months. It sounds obvious, but most people don't realize how fast your score can change when you just stop using credit altogether. It bumped my score enough to unlock better fixed-rate offers, and saved me a lot of money.

I settled a credit card debt of $1200 six months prior to my mortgage application and maintained a credit utilization of less than 25%. Another thing I did was to request my bank to upgrade my limit by adding an extra $2,500 to my initial limit of $5,000 to reduce my ratio, without causing an increment in the debt. This was a consistent impact since lenders measure utilization nearly as heavily as on-time payments. To maintain my score, I did not pose new tough questions at that time. That increased my score by approximately 40 points that got me into an improved credit category. My fixed interest paid 6% down to 5.5% on a mortgage of $200,000 . That would be a savings of about $20,000 interest in 30 years. It also made me more powerful in the negotiation since the lender perceived me as less risky. The approval process was less stressful and also less time consuming due to my pre-planning.

One step I took to improve my credit score before applying for a mortgage was taking out small, short-term loans like a car/bike loan or a small personal loan and keeping the EMIs under 5% of my monthly income. It helped build a steady repayment history without straining my finances. At the same time, I made it a goal to save for a down payment of at least 20% of the house price. That combination not only boosted my credit score but also improved my chances of approval and gave me access to better interest rates.

Reducing the use of credit cards is one of the most effective methods of reinforcing a credit score. It seems to most people that closing balance cards that are not used can be beneficial; however, it usually lowers the amount of free credit and deteriorates the utilization ratios. Having an account open and gradually shrink the balances to less than 10 per cent is far more influential. Balances previously held at or close to 40 percent were reduced to 8 percent in six months in this instance and the score increased by 67 points. That change pushed the rating into the mid-700s, and it opened the door to more powerful financial products at once. The lenders granted mortgage options that were not available before with the higher score. The margin between the two was wide with the result being a reduced interest rate over a 30-year loan. Also, there was no longer a need to purchase private mortgage insurance which further reduced costs monthly. What started as small and regular payments turned out to result in a great deal of long-term financial savings.

Credit scores significantly impact your mortgage. Any score above 670 will be considered good enough to be eligible for most loans. You are no longer limited to only FHA or VA loans. However, if you manage to pull a score above 720/740, you can negotiate better terms, saving thousands of dollars on your mortgage. Take a $300,000 fixed mortgage with a 6.5% interest rate, for example. Even if you are qualified for a 0.5% lower interest rate (6%), you can save around $30,000 on your deal. That's a lot of money and should be taken seriously. Here's what you can do. Keep your credit utilization rate below 30%. So, if your limit is $5000, stop at $500.

I achieved the most significant credit transformation by making sure to pay my entire credit card balance without exception at the end of each month. My financial discipline through monthly credit card balance payment became the most important factor which reduced my credit utilization and proved to lenders that I am a trustworthy borrower. The regular maintenance of my credit score resembled gardening because steady attention allowed it to flourish. The effort I put into paying off my mortgage resulted in better interest rates which turned my dream home into a cost-effective investment that will save me more than $100,000.

The smartest move I ever made as I prepared to buy my first home many years ago was to pay off my credit card balances. I didn't have poor credit, but I was carrying balances, and that kept my utilization ratio higher than lenders like to see. I committed to aggressively paying them off for six months before applying for a mortgage. That one move alone IMPROVED MY SCORE BY ALMOST 40 POINTS, which completely altered the conversation with lenders. Overnight, I was no longer being offered conventional loans with higher rates to qualifying for much more competitive terms. It's proof that even gradual, deliberate changes can move the needle in the long run. Improving my score not only gave me access to lower rates, it also increased my choices of neighborhoods that I hadn't realized were in my price range. A lower rate also meant a lower monthly payment, so I'd have some breathing room in my monthly budget, and I could finally search for homes that were best for my lifestyle long term, rather than what I could squeeze into. Now when I counsel clients, I tell that story, because it's relatable — credit scores might seem abstract, but the effect is very real. A thoughtful step before you apply can be the difference between settling for a low-rent house and buying the home you want.

Before submitting an application for a mortgage, what action did you take to raise your credit score? Paying off revolving credit balances was one of the best things I did to lower my utilization ratio. Although it has a significant impact on your score, credit utilization—the percentage of your available credit that you are using—is one of those metrics that receives little attention outside of the lending industry. Within a few reporting cycles, I noticed a discernible increase by carefully bringing balances down below 30%, and ideally closer to 10%. What effects did raising your score have on your options? It was a huge difference. Lenders consider you to be less risky if your score is higher, which results in lower interest rates and a wider range of loan options. For instance, I have witnessed borrowers suddenly become eligible for conventional loans with much better terms after previously only being eligible for FHA or other credit-flexible programs. In my situation, raising my credit score resulted in a lower down payment and a better interest rate, which added up to thousands of dollars in savings over the course of the loan.

I also paid my credit cards in full 6 months before I applied my first investment property mortgage back in 2003. My score went up to 740 and that was how I got a chance I never knew I had. That 60-point gain saved me almost 200 dollars a month on a 400 000 dollar mortgage. By the difference in interest rates of 6.8 and 5.9 percent, the difference in interest over the 30 years was enormous. What is more important is that lenders began to compete to win my business rather than me pleading to be approved. I have been in mortgage brokering 23 years and tell all my clients the same thing: credit card utilization is worse than missed payments. Maintain balances below 10 percent of limits not the much-quoted 30 percent. Paying down cards strategically I have seen borrowers gain 40-50 points. The timing is important also Never pay off old cards and close them I did that early on and saw my average account age go down and that cost me another 15 points. Never close down those accounts with small frequent purchases. Banks have the best rates to borrowers with above 740. And below that you are leaving money on the table on a monthly basis over decades.