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If you need a home loan, you’re likely planning and saving in advance of your application--applying for a home loan means putting money aside for a down payment, saving for closing costs, and working on your credit and debt ratio in the meantime.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Ways to Improve Your Credit Ahead of Your Home Loan

October 9, 2021

If you need a home loan, you’re likely planning and saving in advance of your application--applying for a home loan means putting money aside for a down payment, saving for closing costs, and working on your credit and debt ratio in the meantime. Most consumers can stand to do a little personal credit repair, but some need more time to work on it than others.

FICO Scores Count But There's More to Consider
It’s not enough to look at your FICO scores before you apply for an FHA mortgage loan--you may need to adjust spending and loan repayment habits, challenge old or wrong information on your credit report, etc.

You’ll find a lot of advice on personal finance blogs saying that you need to start early when getting ready for an FHA loan.

Do you need to improve your FICO scores? It takes time to settle into more thoughtful use of credit and your savings account, but it can also take time to successfully resolve any issues that need to be disputed on your credit report.

Basic Areas To Pay Attention to With Your Credit

Do you need to raise your FICO scores? You can do it but it takes time--you need to pay consistently every time (no lates or missed payments for at least 12 months) and you will have issues to resolve if you carry high balances on your credit accounts.

What does this mean? Some borrowers need to lower the amount of credit use on their accounts as much as possible. Just how much? Credit bureaus report that 30% of your credit limit or less should be your goal.

And then there’s the need to maintain a history of on-time, every-time payments--again, 12 months of such habits should be consistently present on your credit reports before applying for a mortgage.

A More Advanced Technique to Help Your Credit Scores

The information above is “Home Loans 101” type advice and you can get that advice from ANY mortgage lender official site.

But what about more advanced methods that are still able to help you raise your credit score without paying someone else to do it?

Did you know that a credit reporting agency might offer features that can help you raise your FICO scores by reporting recurring payments such as cell phones or utility bills? Experian is one such credit bureau offering this service.The Experian official site offers “credit for your phone and utility bills by adding positive payments to your Experian credit file.”

Not all credit reporting agencies may provide such assistance, and the help may come with a fee. But it’s an excellent type of creative thinking that some need to pursue in order to work on credit ahead of an FHA mortgage loan.

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Learn About the Path to Homeownership
Take the guesswork out of buying and owning a home. Once you know where you want to go, we'll get you there in 9 steps.

Step 1: How Much Can You Afford?
Step 2: Know Your Homebuyer Rights
Step 3: Basic Mortgage Terminology
Step 4: Shopping for a Mortgage
Step 5: Shopping for Your Home
Step 6: Making an Offer to the Seller
Step 7: Getting a Home Inspection
Step 8: Homeowner's Insurance
Step 9: What to Expect at Closing

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