Tips for Increasing Your Credit Score Before You Buy A Home

As a prospective homeowner, you may want to consider boosting your credit score to increase your chances of qualifying for a home loan. While the minimum credit score needed to buy a house in Massachusetts can vary, you’ll typically receive a better interest rate if your credit score is higher because you’ll seem less risky to the lender. 

However, there are several other factors to keep in mind when taking out a mortgage or getting pre-qualified. Following these tips can help you increase your credit score before you buy a house.

What should your credit score be to buy a house?

Credit score requirements for home loans in Massachusetts depend on the type of mortgage and lender. For example, the Federal Housing Administration requires a minimum credit score of 580 for government-backed mortgages like FHA loans, according to the organization’s 2019 guidelines. On the other hand, there is no minimum credit score requirement for veterans or active military members seeking a VA loan through the Veterans Administration.

If you’re not pursuing a government-sponsored mortgage, you’ll want to get your credit score above 700 to qualify for a better home loan rate

How to increase your credit score 

If you want to increase your credit score to qualify for a lower interest rate on a mortgage, start by getting a free copy of your credit report at This allows you to monitor activity on your account and ensure the information is correct. Keep in mind, you’ll need to pay extra or use a different service to get your actual credit score. 

Your credit score is determined by several factors, including your payment history, total amount owed, length of time you’ve had credit, the different types of credit you’ve used and what’s considered “new credit,” which includes recently opened credit accounts and loan applications. To increase your credit score for buying a house, create a plan of attack to improve as many of those categories as possible. 

Fix errors on your credit report

One of the easiest ways to improve your credit score is to fix errors. Twenty-five percent of consumers surveyed by the Federal Trade Commission reported finding errors in their credit reports that may have negatively affected their scores. The good news is that reporting errors often leads to corrections or improvements. Four out of five people who disputed these errors saw some type of modification to their credit reports, according to the FTC.

Use these tips from the FTC to dispute any errors you may find on your credit report. 

Always pay your bills on time

One of the most important factors contributing to your credit score is your ability to pay your bills on time. Use NB Online & Mobile Banking to set up automatic payments for recurring monthly bills to make sure they’re paid on time.

If you’re past-due on any bills, make good on those quickly. Reach out to your lenders to discuss different payment arrangements if you’re having a tough time paying your debt, or negotiate with them to see if they’ll hold off on reporting your late payments to credit bureaus.

Pay down your debt

It may be tempting to carry a credit card balance, but if you want to buy a house, keep your debt low. Keeping a lower debt-to-credit ratio can help improve your credit score. Lenders want to see you’re living within your means before they allow you to take on more debt. Reducing your debt also frees up more of your income, which helps improve your debt-to-income ratio, which lenders check before extending new credit. Needham Bank offers calculators to help you figure out how long it will take to pay off your credit card or get out of debt.

Request more credit 

Another way to improve your debt-to-credit ratio is to ask your credit card companies to increase your credit limit. This will give you more available credit and help bring that ratio down, which can increase your overall credit score. 

Don’t close old accounts

It may seem logical to close accounts with a zero balance, but old accounts provide a credit history, so it’s wise to keep them open. This also rings true if you are recently married or have had another major life event that would trigger you to close accounts.

Keep new credit to a minimum but diversify your credit types

Avoid applying for new credit cards before you buy a house. This can signal to lenders that you need credit and may be in a difficult spot financially. However, if you don’t already have a mix of credit types, you may want to start by adding an installment loan, such as an auto loan or a small personal loan, to show lenders you’re creditworthy and can repay a loan on time. 

Improving your credit score can take time, but it’s well worth the effort and planning when you qualify for a mortgage and get a lower interest rate on your home loan. 

Needham Bank’s Residential Lending team can help guide you through the process and find the best option for you.