How to Prepare Your Credit Prior to Buying a House

Dated: August 15 2023

Views: 355

How to Prepare Your Credit Prior to Buying a House


Buying a house is a big decision, and one of the most important and biggest purchases you’ll ever make.


In order to buy a house, you need to acquire a mortgage or loans first, and to that, you’ll need to get pre-approved by meeting specific qualifications. These may vary by lender, but having a good credit history and credit score is one of the most important things that lenders look for when agreeing to grant you a loan.


Here are some tips on how to prepare your credit before you decide to purchase a home:

Keep a low credit card balance: Your credit card company may give you a certain limit each month, but that doesn’t mean you should reach or come close to exceeding it. Keeping a lower credit card balance makes it easier to pay it off every month, that way you aren’t surprised by a big bill when your credit card statement arrives.

According to Chase, mortgage lenders prefer you to have a lower DTI (debt-to-income) ratio. A lower credit card balance shows lenders that you aren’t in large amounts of debt each month compared to the amount of income you’re bringing in.


Pay your credit cards on time: Each month, your credit card statements will have a due date of when you need to pay off your debt. Make paying your credit cards a part of your monthly bills, and don’t ever forget to pay them.


Failing to pay off your credit cards may result in higher interest rates and fees on the cards themselves, and will result in a lower overall credit score. Mortgage lenders want to see that you keep your balances low and pay them off regularly and on-time.


Set a budget and stay within it: Having a budget is a great way to make sure you can pay your bills each month. A budget ensures that you have enough funds to pay off your credit card debt, and will also have enough to pay a mortgage each month when you purchase a home.


Check your credit score: Credit scores help the bank determine whether or not you pay your bills on time, are in debt, and are likely to pay back a loan granted to you. It’s important to check your credit score occasionally to see what your credit looks like, especially if you are preparing to purchase a home.


Give it time: Building good credit doesn’t happen overnight. Oftentimes, you will need to have a lengthy credit history for lenders to consider approving you for a loan. That’s why it’s a good idea to keep your credit cards open and the balances on them low, so they contribute to your credit score without putting you in debt each month.


You can always improve your credit score by following these tips and setting a more strict budget for yourself. Ultimately, you just need to give it time and you’ll see the results reflected in a high credit score.


If you’re ready to start your home buying journey, reach out to one of our Century 21 XSELL REALTY agents today to get the process started.


Article resources:

Blog author image

Derrick Asante

Derrick has worked with Century 21 XSELL REALTY since 2022. He loves that at XSELL, you are treated as an individual instead of one of many. When you work with Derrick, he will make sure to get the jo....

Latest Blog Posts

Why Real Estate is a Smart Investment for Retirement Income

For many, crafting a secure retirement plan is a paramount concern. When it comes to building a nest egg for your golden years, few options offer the potential for long-term growth, passive income,

Read More

Home inspections tips

When embarking on the exciting journey of homeownership, it's crucial to make informed decisions that safeguard your investment and well-being. One often overlooked yet essential step in the buying

Read More

Understanding the Buying Process

Understanding the Buying Process                                              ;

Read More

Century 21 XSELL REALTY is a Partner of Home for Heroes

Century 21 XSELL REALTY is a Partner of Home for Heroes                                       

Read More