If you’re planning to buy a home in Colorado soon, one of the most important numbers isn’t the price of the house. It’s your credit score. Your credit score plays a big role in determining whether you’re approved for a mortgage loan, what your interest rate will be and how much you’ll pay over the life of the loan. The higher your credit score, the more doors will open for better loan terms and more affordable homeownership.

Whether you’re a first-time homebuyer or ready to move up to your next home, taking the time to improve your credit score before buying a house can make a big difference. Here’s what you need to know and what steps you can start taking right now.

 

Why Your Credit Score Matters When Buying a Home

Your credit score is a three-digit number that represents how well you manage debt. Mortgage lenders use it to assess your creditworthiness and get an idea of how well you’ll repay your loan on time. Most lenders use the FICO® score, which ranges from 300 to 850. Here’s how these numbers reflect your credit.

760 or higher – Excellent credit
700–759 – Good credit
650–699 – Fair credit
Below 650 – Poor credit

The higher your credit score, the better your odds of qualifying for a mortgage with a low interest rate and favorable terms. Even a small difference in your credit score can impact how much you pay each month. For example, improving your score from 680 to 740 could save you thousands of dollars over the life of your loan.

Let’s take a look at some steps you can take to improve your credit score before buying a home.

 

Check Your Credit Report

Before you start house hunting, get a clear picture of where your credit stands. You can access a free credit report once a week from each of the three major credit bureaus—Equifax, Experian, and TransUnion. Visit AnnualCreditReport.com to get started. You can also check your FICO® Credit Score through a feature on Partner Colorado’s Mobile Banking App.

Review your credit report carefully and look for the following things.

• Errors or inaccuracies, such as incorrect balances or late payments.
• Old accounts that should have been removed.
• Fraudulent activity, like accounts you didn’t open.

If you find any mistakes, dispute them immediately. Correcting errors could boost your score within weeks. Visit AnnualCreditReport.com to learn how to file a dispute on your credit report.

 

Pay Down Existing Debt

Your credit utilization ratio is the percentage of your available credit you’re using. It makes up about 30% of your credit score. Ideally, you want to keep your utilization below 30%. For example, if you have a $10,000 credit limit, try not to carry more than a $3,000 balance. Here are some tips to reduce your credit utilization.

• Pay off high-interest credit cards first.
• Make extra payments mid-month, not just on the due date.
• Ask your lender for a credit limit increase (as long as you don’t plan to spend more).

Lowering your balances not only improves your score, it shows lenders you can manage credit responsibly.

 

Make All Payments on Time

Payment history is the most important factor in your credit score, accounting for about 35% of your total score. Even one missed payment can lower your score significantly, so consistency is key. Here are some tips to stay on track.

• Set up automatic payments or calendar reminders.
• If you can’t make a full payment, pay at least the minimum amount due.
• Consider consolidating payments if you’re juggling multiple due dates.

If you have a history of missed payments, start building a streak of on-time payments now. Over time, this will outweigh past mistakes.

 

Avoid Opening New Credit Accounts

When you apply for a new credit card or loan, the lender performs a hard inquiry on your credit report. Too many hard inquiries in a short time can temporarily lower your score. Before applying for a mortgage, avoid the following things.

• Opening new credit cards
• Financing large purchases
• Taking out personal loans

If you’re working to improve your credit score before buying a house, focus on stabilizing your credit profile. Lenders like to see consistent, responsible credit behavior rather than new accounts or frequent inquiries.

 

Keep Old Accounts Open

Length of credit history also affects your credit score. Closing old accounts, especially ones in good standing, can actually hurt your credit by shortening your average account age and lowering your total available credit.

Unless an old account carries an annual fee or you no longer trust yourself to keep it open responsibly, it’s often better to keep it active. You can charge a small amount periodically (like a subscription or gas purchase) and pay it off in full to keep the account current.

 

Diversify Your Credit Mix

Lenders like to see that you can manage different types of credit responsibly. This is known as your credit mix, which can include the following.

• Credit cards
• Auto loans
• Student loans
• Personal loans
• Mortgages

If you only have credit cards, consider adding a credit builder loan or secured personal loan from your credit union. These can help improve your credit score; while showing you can handle installment payments responsibly.

 

Be Patient and Consistent

Improving your credit score doesn’t happen overnight. It can take several months or even longer to see significant improvement. However, steady, consistent progress does pay off. Keep these habits in mind.

• Pay every bill on time
• Reduce your balances
• Monitor your credit regularly
• Avoid major changes before applying for a mortgage

The effort you put in now can save you thousands in interest over the life of your home loan.

 

Get Prequalified with Your Credit Union

Once your credit score is in a strong position, it’s time to get prequalified for a mortgage. Prequalification gives you an idea of how much home you can afford and what loan options are available. It also shows sellers you’re serious and financially ready to buy.

At Partner Colorado, we offer a variety of mortgage options with competitive rates and personalized service. Our loan officers take the time to understand your financial goals and guide you through every step of the home-buying process.

 

Take Advantage of Credit-Building Resources

If your credit score still needs a boost, Partner Colorado offers tools designed to help you build and maintain healthy credit, like the following.

• Credit builder loans to establish positive payment history.
• Credit cards to demonstrate responsible use.
• Free financial education webinars and seminars and financial wellness counseling.

By using these tools wisely, you can strengthen your credit profile and put yourself in the best position for a mortgage approval.

Your credit score can be the key that unlocks the door to homeownership. The good news is it’s completely within your control to improve it. By checking your credit report, paying down debt, staying current on payments and avoiding new credit lines, you can raise your credit score and your financial confidence.