Getting Your Credit in Shape to Get a Mortgage

Louisiana REALTORS® • July 11, 2024

Buying a home is one of the biggest financial commitments you will ever make. Getting a mortgage is a critical stage in this process, and getting a mortgage  with favorable terms depends in large part on your credit score. Lenders use your credit score to determine your creditworthiness, which affects the interest rates and terms of the loans they offer. Preparing your credit before applying for a mortgage can save you hundreds of dollars over the course of the loan.


Understanding Credit Scores

Your credit score is a numerical representation of your creditworthiness, typically ranging from 300 to 850. The higher your score, the better your creditworthiness in the eyes of lenders. Credit scores are calculated based on several factors:


  • Payment History (35%): Your record of on-time payments.
  • Credit Utilization (30%): The amount of credit you're using compared to your credit limits.
  • Length of Credit History (15%): The average age of your credit accounts.
  • Credit Mix (10%): The variety of credit types you have, such as credit cards, loans, and mortgages.
  • New Credit (10%): The number of recent credit inquiries and newly opened accounts.


Steps to Improve Your Credit Score

Review Your Credit Reports

Equifax, Experian, and TransUnion are the three main credit bureaus. Start by acquiring your credit reports from each. Every bureau is required to provide you with a free report once a year at AnnualCreditReport.com. Carefully check these reports for mistakes, such as inaccurate account information or fraudulent activity, and raise any discrepancies that you find.

 

Make Payments On Time

Your credit score is mostly influenced by the payment history you have provided. It's important to always pay your payments on time. For peace of mind, set up automated payments or reminders so you never forget a deadline. Your credit score can be severely impacted by even one late payment.

 

Cut Down on Credit Usage

The ratio of your outstanding credit card balances to your credit limits is known as credit usage. To raise your score, try to keep your utilization below 30%. Reduce your balances or ask for an increase in your credit limit, if at all possible (but avoid piling on extra debt).


Don't Create New Credit Accounts

Opening new credit accounts to increase your available credit may seem appealing, but doing so will temporarily drop your score because of hard queries and a decline in the average age of existing accounts. Create new accounts only when it is absolutely required.

 

Keep Your Old Credit Accounts Open

Keep older accounts open even if you don't use them much since your credit history matters. Your credit score may suffer if you close old accounts because doing so can decrease your credit history and lower your total amount of available credit.


Mix Up Your Credit

A variety of credit kinds, such as retail accounts, installment loans, and credit cards, can all help raise your score. However, only take on additional credit types if you can responsibly manage the payments and it makes sense for your financial condition.

 

Reduce Debt Wisely

Prioritize paying off high-interest debt in order to save money on interest and expedite the reduction of your total debt. To speed up your debt repayment, think about applying the avalanche or snowball methods, which pay off high-interest debt first and smaller balances last, respectively.


Keep an Eye on Your Credit

Use credit monitoring services to keep an eye on your credit record and score. Frequent monitoring keeps you updated on any changes to your credit score and warns you of any unusual activity that might have an impact on it.


Timing Your Mortgage Application

Work on raising your credit score well in advance of when you intend to apply for a mortgage, as it takes time. Try to start half a year or more in advance. You have this window of time to make adjustments and observe how they improve your credit score.

 

It's crucial to improve your credit before applying for a mortgage in order to get the best potential loan conditions. You can raise your creditworthiness and chances of acceptance by being aware of the elements that affect your credit score and taking proactive measures to raise it. Your REALTOR® and your lender can also provide helpful ways to make sure that your credit is in a place to get you the most favorable terms for your mortgage. 

RESOURCES FOR BUYING A HOME

Consumer Guide Update: Teen Financial Literacy

By Louisiana REALTORS® • October 9, 2026
Want Your Teen to Own a Home Someday? Start Talking Money Now Teens may not be thinking about mortgage rates or down payments just yet, but the money habits they’re building now can follow them for years. And 88% of teens surveyed by Fannie Mae and Junior Achievement said they want to own a home someday. This week’s Consumer Guide: Talk to Your Teens About Money and Homeownership makes those conversations a little easier, covering everything from credit scores and budgeting to debt, renting versus owning and saving for that eventual down payment. So yes, you may have to interrupt the doomscrolling. But helping teens get smarter about money today could put them in a much better position to get the keys to a home of their own down the road. Download all of NAR’s Consumer Guides in English or Spanish at facts.realtor. For ease of reference, below is a list of the most recent guides: NEW: Teen Financial Literacy Fraud Red Flags Helping Family Members Become Homeowners Prepare Your Home for Hurricane Season Condominium Insurance Thank you for your continued engagement with the “Consumer Guide” series and for sharing the resources with prospective clients to ensure they have the information they need to find success in their home buying or selling journey. Remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. The next Consumer Guide, scheduled for publication on Oct. 21, will cover winter cold and storm preparedness.

Constitutional Amendment Positions for November 3 Election

By Louisiana REALTORS® • October 9, 2026
Homeownership Is on Louisiana's November Ballot

Cookbook for the REALTORS® Relief Foundation On Sale Now!

By Louisiana REALTORS® • October 8, 2026
After months of gathering recipes from across our Louisiana REALTORS® family, the cookbook is ready! This 200+ page collection is filled with Louisiana flavor, REALTOR® heart and recipes contributed by our members. We launched sales of the cookbook at the Fall Governance Meetings. You can now purchase your copy for $30 directly from the printer and shipped to you! Additionally, we will have copies available at the RRF booth at NXT . After NXT, we will carry a limited stock at the LR office for you to purchase through the LR Merch Shop and pick-up from the office or at an LR event, as stock is available. Even better, $15 from every cookbook sold will be donated to the REALTORS® Relief Foundation (RRF) to help provide housing-related assistance to REALTORS® and their families following disasters. Pick up a copy for yourself, grab one as a gift and enjoy a taste of Louisiana while supporting a great cause!
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