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8 Steps to Take to Establish Credit Before Buying a House

What is the required credit score to buy a home in the United States today? That answer can vary greatly depending upon who you are talking about. Different mortgage companies have varying Building a good credit score takes time but it is definitely worth it if you want to buy a home at a good interest rate. But what if you do not have much credit at all? Don't worry! There are things you can do to establish credit quickly. If you are planning to buy a home in the next year or so, now is the time to take the below eight steps to establish a good credit score:

#1 Take Out Unsecured Credit Lines

The first step to establishing credit to buy a house is to open unsecured credit lines. If you do not have much in the way of credit history – as opposed to bad credit – you should be able to open one or two credit cards, or a personal line of credit at a bank. You also might try a department store credit card. New trade-lines can help improve your credit scores.

After you open them, you need to use them, but not excessively. Do not run up debt and make minimum payments. Make small purchases and pay them off every month. You also can pay them off right away online when you make purchases. Just make sure you are regularly using your credit and paying it off in full quickly. When the credit card company sees you are behaving responsibly, they will probably increase your credit line. Then you are on your way to establishing good credit.

#2 Do Not Miss Payments

It is important to always make payments on time. Even being 30 days late on a payment can result in a negative mark on your credit. We also recommend making payments a few days early to make sure you are always on time. Lenders want to see you have a clean payment history for at least a year before you apply for a mortgage, and two years is better.

#3 Lower Debt to Income Ratio

As mentioned above, you want to use your credit cards to establish credit, but pay them off. Do not take on credit card debt as it will increase your debt to income ratio, which makes you a higher risk for a mortgage. When you apply for a mortgage, the lender will examine your current level of debt. So if you have significant debt, you will be better off to pay most of it off before you apply.

#4 Repair Credit Report

You should watch your credit report carefully for a year before you get a mortgage. Be certain there are not any surprises when the mortgage lender pulls your credit. If there is anything wrong on your credit report, you want to get it cleared up with the credit agencies right away. You can dispute any inaccurate negative mark on your credit with each credit bureau. You must provide proof that you did make the particular payment on time.

#5 Work Together

If you are applying for a mortgage with your spouse, you need to have good credit reports for both of you. If your spouse has average or worse credit that cannot be fixed up in 12 months, you may consider getting a mortgage by yourself. He or she can be added to the mortgage later with a quit claim deed.

#6 Save Your Money

The more money you have in savings or in another liquid account, the better a risk you are to the mortgage lender. You also can use some of that money to pay down debt before you get a mortgage.

#7 Take Out Various Types of Credit

Another good way to quickly build credit is to have several different types of credit accounts. If you have two credit cards, that is fine, but try to get a department store credit card or even a small car loan. A car loan is an installment loan that, in the lender's eyes, requires financial discipline to pay every month. With a good mix of credit, you are viewed as a better risk, and this will increase your credit score faster.

#8 FHA Alternative

If you are still having trouble establishing credit, another option is to get an FHA-backed loan. These loans are guaranteed by the US government, and lenders allow more flexibility for people qualifying for these loans. For example, you may be able to use rental payments, phone bills and utility bills are proof of your financial stability with an FHA-backed loan.

What to Remember

Getting a mortgage with a limited credit history is not as difficult as it seems. True, if you have no credit history and want to get a home loan next month, it could be difficult. But if you allow nine months to a year of time before you apply, you can often get a good enough score to get a loan at a decent interest rate.


First Time Home does not offer mortgages or direct financing. is a website that offers information about buying a house and does not guarantee credit or home loans directly or indirectly through representatives or agents. provides a news and information service by offering editorial content related to the housing and mortgage industry. This website has no official relationship with the Federal Housing Administration or the Department of Housing and Urban Development.

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