Credit Before the Mortgage: A 12-Month Timeline for Houston Buyers

Your credit decides two things when you buy a home: whether a lender says yes, and what rate you'll pay. A better profile can mean a lower rate, a lower payment and more cash left over each month to invest.

Chapter 2 of my book covers credit as a wealth-building tool. For buyers, it works best as a timeline.

How scores are built

FICO publishes the general weights: payment history is the largest factor, followed by how much of your available credit you use. Length of history, new credit, and mix of accounts make up the rest. Mortgage lenders also often use different scoring versions than the free apps on your phone, so don't be surprised when the lender's number doesn't match yours. For that, see what FHA's new scoring models mean.

12 months out: get the facts

• Pull your reports from all three bureaus at AnnualCreditReport.com.
• Dispute anything that's wrong, with documents. The bureaus must investigate.
• Set every bill to autopay at least the minimum, and keep tracking due dates yourself.

6 months out: lower what you owe

• Pay down revolving balances. Lower utilization generally helps, and paying before the statement date can show a lower balance.
• Don't open or close accounts without a reason. Older accounts help your history.
• If you have a late payment from a one-time problem, you can ask the creditor for a goodwill adjustment. It's a request, not a right.

3 months out: stop making changes

• Avoid new credit applications and large purchases on credit.
• Keep balances low and payments on time.
• Talk to a lender now about the loan types you may qualify for.

1 month out: protect the profile

• Don't co-sign, finance furniture or buy a car before closing. Yes, even if the furniture store is offering 0%.
• Keep your documents ready and respond quickly to the lender.

Shortcuts to be careful with

• Credit repair companies that guarantee results. They can't do anything you couldn't legally do yourself.
• Buying tradelines or "piggybacking" for a fee. It can be seen as misrepresenting your credit to a lender. Ask a lender before using any such service.
• Adding an authorized-user account only works if the account is old and well managed, and lenders may not count it.

Frequently asked questions

What score do I need? It depends on the loan type and lender. Higher scores generally get better pricing, and my article on comparing offers shows how to compare Loan Estimates.

How fast can I improve my score? It depends on what's dragging it down. Errors and high balances can sometimes improve quickly, while late payments take time.

Does a divorce change my plan? It can. See the divorce credit restoration guide, and if you’re selling a home together, how to protect both spouses’ credit through the sale.

If you're about a year away from buying, I can introduce you to lenders and credit professionals I trust. I'm a REALTOR®, not a credit professional, so they'll handle the specifics of your profile.

This article is educational and is not tax, legal, or investment advice. Rules change and every household is different, so talk to a qualified CPA, financial advisor, or attorney before acting. I am a REALTOR®, not a tax or financial professional. This is one of a series based on my book, The Wealth Architect Blueprint; the full chapter is on the Wealth Strategy page.