First-time home buyers are pretty great at coming up with reasons why they’ll never, ever be able to afford to take the leap. And somewhere near the top of that list is usually this one: “My credit score’s too low.”

Wanna know a secret? That’s rarely actually true. A lower-than-perfect score does not lock you out of the real estate game. 

Don’t get us wrong: Good credit is definitely important when purchasing a home. Your credit score impacts your interest rates, which can make thousands of dollars of difference over the life of your mortgage.

So if you’re worried about your score (or you just kinda want to brag about it), here are 5 ways to pull it up: 

1. Really get to know your credit score and how it’s calculated. Your credit score tells a lender how likely you are to repay a loan. Basically, you and the bank are both looking to make a good investment: You’re investing in a home, and your lender’s investing in you. 

Lenders look at things like:

• Payment history

• How much credit you’re currently using

• How long you’ve been using credit

• What kinds of debt you’re carrying around

• Any new credit you’ve established

The first two factors—your payment history and utilization—are the biggest factors to building a great credit score.

2. Check and correct your credit report. Every year you have access to a free credit report from each of the major reporting agencies: Experian, TransUnion, and Equifax. Give your reports a good once-over (or two or seven) to make sure you agree with everything. If something looks wonky, contact the reporting agency to get it corrected! We’re talking name spelling, addresses, incorrect accounts, duplicate accounts, and signs of identity theft.

3. Make your payments on time. At this point, autopay should be your BFF. Timeliness of payments accounts for a whopping 35% of your credit score! That means paying your bills on time—even if you’re just paying the minimum amount allowed—boosts your credit. (A small, on-time payment is better than a big, late one!)

4. Reduce your debt. Credit utilization—how much credit you’re currently using compared to your pre-set limit—makes up another 30% of your credit score. Using less than 30% of what’s available to you shows lenders you’re a reliable customer. 

You can reduce your utilization percentage by paying down your debt, getting a credit line increase, and using a debit card for those late-night Amazon splurges.

5. Don’t mess with your accounts. When you’re looking to make a huge investment (like your first home! Yay!) don’t open any new credit accounts. Adding to your available credit flags you as a risky investment because the more you borrow the less likely you are to pay it all back. 

But here’s the tricky part of building a good credit score: You shouldn’t close any accounts either! Why? Because it’ll affect your utilization percentage and decrease your points for credit length and history. 

Want to know exactly what your credit score could mean for your first-time home buying experience? Book a Discovery Meeting with us today!