A credit score is a number that sums up how you have handled borrowing. Lenders use it, along with your income, debts and savings, to decide whether to approve a loan and at what rate. It is one of the few parts of the process you can improve in advance.
What goes into a score
Scoring companies publish the main factors, and they are the same in broad terms: whether you pay on time, how much of your available credit you use, how long you have had credit, how often you apply for new credit, and the mix of accounts you hold. On-time payments and low balances matter most. The CFPB explains scores and reports in plain language: credit reports and scores.
What lenders look at
Each loan type, such as conventional, FHA or VA, has its own guidelines, and each lender can add its own. The score, the amount of your down payment, your income and your debts all work together. A lender can tell you exactly where you stand and what would help.
Steps that help
- Check your reports for free at AnnualCreditReport.com and dispute anything wrong.
- Pay every account on time. Set up automatic payments for the minimums.
- Pay down credit card balances; lower balances relative to your limits usually help your score.
- Keep old accounts open, and avoid opening new ones in the months before you apply.
- Avoid big purchases on credit, such as furniture or a car, until after you close.
- Shop for a mortgage within a short window: the credit scoring models generally treat several mortgage inquiries in a short period as one. Your lender can explain how.
Make a plan
Our 12-month plan to get ready to buy puts these steps on a timeline. The mortgage payment calculator shows how a different rate changes the payment.
Talk to a lender. Rates, loan programs and approvals come from lenders, not from websites or real estate agents. Talk to your own mortgage broker, or use our preferred lender, Point Mortgage Corporation (NMLS #231073), at (619) 475-4095. You are always free to choose any lender you like, and you can verify any lender’s license at nmlsconsumeraccess.org.
General information, not legal, tax or lending advice. Rules, schedules and programs change, so confirm current details with the official source.
More guides
- Inspection Day: What to Expect, What to Ask and What to Do Next — A first-time buyer's guide to the home inspection: how to prepare, the questions to ask, and how to use the report.
- The Best Time to Buy or Sell in San Diego, Month by Month — Charts and numbers show which months San Diego homes sell most, when prices peak and when buyers have the most room to negotiate.
- Printable Neighborhood Sheets by ZIP Code — A one-page, printable snapshot of any San Diego County ZIP code: typical values, rent, days to sell, income and the age of homes.
- Questions to Ask a Mortgage Lender Before You Choose One — A printable list of questions that help you compare lenders on equal footing, and what to look for on the Loan Estimate.