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

Next Fortify Homes Lottery Goes Live June 1 as Program Expands to New Parishes

By Louisiana REALTORS® • May 27, 2026
From the Louisiana Department of Insurance: During a press conference today with Governor Jeff Landry, Insurance Commissioner Tim Temple announced that registration for the next round of the Louisiana Fortify Homes Program (LFHP) will open at 8 a.m. on Monday, June 1, and will include 3,000 grants. The registration period for this lottery will be open for three weeks, closing at 5 p.m. on Friday, June 19.  During the press conference, Gov. Landry signed HB 1187 by Rep. Paul Sawyer, which will allow Louisiana Citizens Property Insurance Corporation to transfer $50 million in additional Katrina bond assessment funds to the LFHP. Combined with the $30 million in funding the program will receive through taxes and fees on insurance entities, the LFHP will receive a total of $80 million this year. “By lowering overall losses, we can reduce insurance and reinsurance costs, draw more insurers into the market, motivate existing companies to write additional policies and lower insurance premiums,” said Commissioner Temple. “That is exactly what the Louisiana Fortify Homes Program is designed to do.” The list of coastal parishes that are eligible to participate is expanding to include Acadia, Jefferson Davis and Lafayette parishes. Additionally, homeowners who live in the portions of Ascension, Calcasieu, Iberia, Livingston, St. Martin, St. Tammany, Tangipahoa and Vermilion parishes that were previously not included in the program will now be eligible to participate. A map showing the full list of eligible parishes is available on FortifyHomes.La.Gov . “Louisiana is the fastest growing state in the country for Fortified roofs, and that growth is not by accident—it is the result of strong support from Governor Landry and legislators like Chairman Talbot, Chairman Firment and Representative Sawyer, targeted program design, and a clear recognition that strengthening homes is one of the most effective ways to reduce insurance losses,” said Commissioner Temple. “At the end of the day, this program is about more than just roofs. It is about protecting families, it is about strengthening communities, and it is about putting Louisiana in a stronger position—both physically and economically—to face the challenges ahead.” To participate in the lottery, homeowners must register during the June registration period. Homeowners who registered for a previous round but were not selected must register again to participate. People who register on the last day of the registration period have the same chance of being selected as those who register on the first day, so there is no need to rush to register as soon as the period opens. When registering, homeowners will need to upload their homestead exemption, insurance policy declarations page that includes wind coverage, and flood insurance declarations page if the residence is in a flood zone. Homeowners who need assistance obtaining a copy of their homestead exemption should contact their parish tax assessor. Homeowners can contact their homeowners and flood insurance companies or agents for a copy of their policy declarations page. Homeowners are required to create a profile in the LFHP system before registering for the lottery and may do so by visiting the LFHP website and clicking the Login button. Homeowners who previously created a profile may use the same one for this and future rounds. Once the lottery registration period closes, the LFHP will randomly select 3,000 participants and send email notifications to registrants about whether they were selected to participate. These selection notices will be sent via email beginning on Monday, June 22. There are several program requirements that homeowners should be aware of before registering. Those interested in the program are encouraged to review eligibility information and frequently asked questions at FortifyHomes.La.Gov to determine whether their home meets the requirements for the program. If selected to participate in the grant program, homeowners will be financially responsible for having the home evaluated by a FORTIFIED-certified Evaluator as well as costs for the roof upgrade including permits, inspections and construction costs beyond the amount of the grant The LFHP provides grants of up to $10,000 for homeowners to upgrade their roofs to standards set by the Insurance Institute for Business & Home Safety. The program helps Louisiana homeowners strengthen their roofs to better withstand hurricane-force winds.
Work with an experienced real estate agent to prepare for your home purchase

How to Lower Your Debt-to-Income Ratio Before Buying a Home in Louisiana

By Louisiana REALTORS® • May 25, 2026
Learn how to lower your debt-to-income ratio before buying a home in Louisiana and why working with an experienced real estate agent can help.

Consumer Guide Update: Overcoming Roadblocks to a Sale or Purchase

By Louisiana REALTORS® • May 22, 2026
NAR is pleased to share the latest new consumer guide, “Overcoming Roadblocks to a Sale or Purchase,” which helps buyers and sellers prepare for the most common potential pitfalls so their transaction closes smoothly. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow up to two weeks for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Overcoming Roadblocks to a Sale or Purchase How Solar Impacts a Real Estate Transaction Navigating Interest Rate Shifts Financing a Renovation When You Buy Staging Your House for a Sale 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. On June 3, we’ll have a new consumer guide on unpacking after a move and a refreshed guide in the value of MLS.
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