Help! My credit score isn't high enough for the mortgage rate I want. What can I do to improve it, and how long will it take?

Many are talking about the current low mortgage rates. As of this week, a 30-year fixed mortgage is at 2.5%, with more city residents moving to suburban areas, leading to the highest home sales since 2006. However, to take advantage of these rates, you need a solid credit score. So, what if your score isn’t quite there yet? Don’t worry! Experts say there are actionable steps you can take now to improve your score while saving for a down payment.

“Many overcomplicate credit,” says Matt Schulz, chief industry analyst. “It boils down to three key actions: timely payments, low balances, and cautious credit applications.”

Here’s where to begin.

Make Timely Payments

Timely bill payments are crucial for boosting your credit score, says Bevery Harzog, a credit expert.

“Securing the lowest mortgage rate can save a significant amount over time, and a great credit score is vital for that,” Harzog explains. If you're prone to late payments, consider using autopay for your bills to help maintain consistency.

Reduce Credit Card Debt and Control Spending

Now’s the time to tackle any credit card debt and avoid large purchases before applying for a mortgage. Your “credit utilization ratio” plays a key role in your score, reflecting how much of your available credit you’re currently using. Aim to keep this ratio below 10%, with zero debt being ideal. Harzog recommends making an extra payment just before your balance is reported, ensuring it reflects your lowest amount when lenders review your score.

Steer Clear of New Credit Applications

Avoid opening new credit accounts while working on your credit score. Each application can lower your score by 2 to 5 points, according to Harzog. Although these deductions are temporary, they can jeopardize your chances of getting the best mortgage rate.

Keep Your Credit Cards Open

Closing a credit card can negatively affect your score since you lose access to available credit, which can improve your utilization ratio. Maintaining open accounts (as long as they’re in good standing) can help boost your score. Feel free to close cards, but save that for after securing your mortgage!

Monitor Your Credit Progress

As you implement these changes, regularly check your credit report to gauge your progress. Your bank or credit card provider might provide updates, or you can visit annualcreditreport.com. Consider paying for a FICO score or obtaining a free educational score to evaluate your direction.

It’s crucial to verify that your reported balances are accurate, there are no late payment errors, and all accounts listed belong to you. Make sure to review reports from all three bureaus (Experian, Transunion, and Equifax) individually.

“Correcting inaccuracies on your credit report can significantly enhance your score,” Schulz states. “Many don’t realize how often errors occur, and these can severely impact your credit.”

How Long Will It Take?

With consistent on-time payments, reducing debt, and refraining from accumulating new credit, Harzog suggests you might see a score improvement within about a month—essentially after one billing cycle. Depending on your starting point, you may need to maintain these habits longer. The key is to improve your score as much as possible before lenders check with credit bureaus.

“Purchasing a home is often the largest financial decision people make, and obtaining a low rate can save thousands over the years,” Schulz remarks. “The process is simpler than many think, but remember, improving credit is a long-term commitment.”