Updated July 2026 · 12-minute read · Reviewed by a CFP® practitioner
Your credit score can make or break your homebuying plans. A 100-point difference in your score can save you $50,000+ in interest over the life of a 30-year mortgage. If your score is below 740, here's exactly how to improve it before you apply for a mortgage.
Lenders use your credit score to determine your interest rate. Higher scores get lower rates, which can save you tens of thousands over the life of your loan.
| Credit Score | Interest Rate | Monthly Payment ($400K loan) | Total Interest (30 years) |
|---|---|---|---|
| 760+ | 6.50% | $2,528 | $510,080 |
| 700-759 | 6.75% | $2,593 | $533,480 |
| 680-699 | 7.00% | $2,661 | $558,000 |
| 660-679 | 7.50% | $2,797 | $607,000 |
| 620-659 | 8.25% | $3,016 | $685,760 |
Example: If you have a 640 score and improve it to 760, you'll save $488/month and $175,680 in interest over 30 years. That's the cost of a new car, or a year of college tuition.
Before you can improve your score, you need to know where you stand. Get your free credit reports from all three bureaus (Equifax, Experian, TransUnion) at AnnualCreditReport.com.
Pro tip: 1 in 5 credit reports has an error that could lower your score. Disputing errors can boost your score 20-50 points in 30-60 days.
Your credit utilization ratio (how much of your available credit you're using) is the second-most important factor in your credit score (30% of your score). High utilization hurts your score, even if you pay in full every month.
Utilization = (Total credit card balances ÷ Total credit limits) × 100
Example: If you have 3 cards with $5,000 limits each ($15,000 total) and balances of $2,000, $1,500, and $1,000 ($4,500 total), your utilization is 30%.
When you apply for new credit, the lender pulls your credit report (a "hard inquiry"). Each hard inquiry can lower your score by 5-10 points and stays on your report for 2 years.
If you're shopping for a mortgage, multiple inquiries within 45 days count as one inquiry. So get all your mortgage quotes within a 2-week window to minimize the impact.
Your payment history is the most important factor in your credit score (35% of your score). Even one late payment can lower your score 50-100 points and stay on your report for 7 years.
If you have a few late payments from years ago, they'll fall off your report after 7 years. If you have recent late payments, focus on making every payment on time going forward. The impact of late payments diminishes over time, and recent on-time payments will help offset them.
If you have a family member with excellent credit and a long credit history, ask them to add you as an authorized user on their credit card. Their positive payment history and low utilization will be added to your credit report.
Pro tip: This strategy can boost your score 20-50 points in 30-60 days, but it only works if the primary user has excellent credit habits.
Your credit mix (the types of credit you have) accounts for 10% of your score. Lenders want to see that you can handle different types of credit (credit cards, auto loans, mortgages, student loans).
If you only have credit cards, consider taking out a small installment loan (like a credit-builder loan) to diversify your mix. But only do this if you can afford the payments, missing payments will hurt your score more than having a limited credit mix.
| Action | Time to see results | Potential score increase |
|---|---|---|
| Dispute errors | 30-60 days | 20-50 points |
| Pay down credit cards | 30-60 days | 20-100 points |
| Become authorized user | 30-60 days | 20-50 points |
| Make on-time payments | 3-6 months | 10-30 points |
| Late payments age | 12-24 months | 20-50 points |
Bottom line: If you start 6-12 months before you plan to buy, you can realistically improve your score 50-100+ points.
Check your credit score every month for 6-12 months before you plan to buy. This lets you track your progress and catch errors early. You can get free credit scores from Credit Karma, Credit Sesame, or your credit card issuer. Get your full credit reports (not just scores) from AnnualCreditReport.com once a year.
Yes, but only by a small amount (10-30 points). The fastest way to boost your score in 30 days is to dispute errors, pay down credit card balances, and become an authorized user. More significant improvements (50-100+ points) take 3-12 months of consistent on-time payments and low utilization.
It depends. If the collection is recent (less than 2 years old), paying it off won't remove it from your report, it will just update the status to "paid collection." The negative impact diminishes over time, so if the collection is old, it may be better to let it age. If the collection is recent and you can afford to pay it off, do so, but get a "pay for delete" agreement in writing first.
For a conventional loan, you need a minimum score of 620 (740+ for best rates). For an FHA loan, you need 580 (with 3.5% down) or 500 (with 10% down). For a VA loan, most lenders require 620. For a USDA loan, most lenders require 640. The higher your score, the better your rate and terms.
No. Checking your own credit score is a "soft inquiry" and doesn't affect your score. Only "hard inquiries" (when you apply for credit) can lower your score by 5-10 points. You can check your score as often as you want without any impact.
Improving your credit score before buying a house can save you tens of thousands in interest over the life of your mortgage. Start 6-12 months before you plan to buy, and focus on these five steps: (1) get your credit reports and dispute errors, (2) pay down credit card balances, (3) don't open new credit accounts, (4) make all payments on time, and (5) become an authorized user if possible.
Use our mortgage calculator to see how different credit scores affect your monthly payment and total interest.
See how much you can save by improving your credit score.
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