You should also evaluate your report as a lender would. What red flags are there (late payments, accounts in collections, lots of credit inquiries, etc.)? What might give a lender pause about your application? If you spot any of these issues, you’ll want to rectify them before applying for your mortgage.
2. Put all your bills on autopay.
Your payment history makes up a whopping 35% of your FICO score, so missing a payment or letting a bill go to collections can have a serious impact on your score — not to mention your chances of getting a mortgage.
To prevent this, put your bills on autopay or set up payment reminders at least a few days before each bill is due. This will keep your payments on track as you lead up to buying a home.
3. Pay down some debts (or ask for a credit line increase).
Your credit utilization rate, or the amount of your credit line you’re currently using, accounts for another 30% of your score. That means the more of your credit line you spend, the lower your score will presumably go.
If you currently have a high utilization rate (total balance/credit limit * 100), then work on paying down your debts to lower it. You can also ask your credit card company or bank for a limit increase. This will also reduce your utilization rate (as long as you don’t spend the extra money).
4. Avoid new debt.
If a mortgage loan is on your radar, then avoid applying for new credit cards, loans, or other debts. These not only result in hard credit inquiries (hurting your score), but they’ll increase your debt-to-income ratio, too, making it harder to qualify for a mortgage.
Another quick tip regarding your credit cards and debts? In the event you’re able to pay an account off in the months leading up to your home purchase, don’t close it out. The length of your credit history makes up 15% of your FICO score, so keeping long-standing accounts open is critical.
5. Sign up for a credit monitoring service or app.
Make sure you monitor your credit score regularly. Apps like Mint can do this (they also help with budgeting), or your bank or credit card may offer these services as well.
The main point? You can’t improve what you don’t know needs improving. So make sure you have visibility into your credit, and start making moves now to boost your FICO score — no matter how far down the line your home purchase might be.