How to Improve Your Credit Score for a Mortgage

Introduction

Your credit score is the financial passport that can either open doors to homeownership or leave you struggling with high interest rates and unfavorable terms. For most Americans, securing a mortgage represents the largest financial transaction of their lives, and your credit score plays a pivotal role in determining not just whether you qualify, but also how much that dream home will ultimately cost you.

In today’s competitive housing market, even a modest improvement in your credit score can translate to thousands of dollars in savings over the life of your mortgage. This comprehensive guide will walk you through practical, actionable steps to improve your credit score specifically for mortgage applications, helping you secure the best possible terms and rates.

Whether you’re a first-time homebuyer with limited credit history or someone looking to refinance with better terms, understanding how to strategically improve your credit score for mortgage approval is essential. Let’s dive into the specifics of credit scores, why they matter for mortgages, and the proven strategies that can help you achieve your homeownership goals.

Understanding Credit Scores and Mortgage Requirements

What Is a Credit Score and Why Does It Matter for Mortgages?

A credit score is a numerical expression based on analysis of your credit files that represents your creditworthiness. In the United States, FICO® (Fair Isaac Corporation) scores are the most widely used credit scoring models, ranging from 300 to 850. The higher your score, the more favorably lenders view your application.

For mortgage applications, your credit score is critical because it:

• Determines whether you qualify for a mortgage
• Influences the interest rate you’ll receive
• Affects the down payment requirements
• Impacts the types of mortgages available to you
• Dictates the terms and conditions of your loan

Even a small difference in your interest rate can have a significant impact over the life of a 30-year mortgage. For example, on a $300,000 mortgage, the difference between a 6.875% rate and a 7% rate would save you over $8,000 throughout the loan term.

Minimum Credit Score Requirements by Mortgage Type

Different mortgage programs have varying minimum credit score requirements:

It’s important to note that these are minimum requirements, and the average credit score for approved mortgage applicants is significantly higher. According to recent data from Optimal Blue, the average credit score for borrowers getting a purchase loan is 738.

How Credit Scores Affect Mortgage Interest Rates

Your credit score directly impacts the interest rate you’ll be offered. Here’s a general overview of how credit scores correlate with mortgage rates:

• Excellent (740+): Qualifies for the best available rates
• Good (700-739): Slightly higher rates than excellent
• Fair (660-699): Moderately higher rates
• Poor (620-659): Significantly higher rates
• Very Poor (below 620): May not qualify for conventional loans

Even a 0.5% difference in your interest rate can add tens of thousands of dollars to the total cost of your mortgage over 30 years. This makes improving your credit score one of the most financially rewarding steps you can take before applying for a mortgage.

Factors That Determine Your Credit Score

Understanding what influences your credit score is crucial for improving it. The FICO® scoring model considers five main categories:

Payment History (35%)

Your track record of paying bills on time is the single most important factor in your credit score. Late payments, collections, foreclosures, and bankruptcies can significantly damage your score.

Credit Utilization (30%)

This represents how much of your available credit you’re using. Lower utilization rates generally indicate better credit management. Experts recommend keeping your utilization below 30% of your credit limits.

Length of Credit History (15%)

Longer credit histories allow for better assessment of long-term financial behaviors. This includes the age of your oldest account, the age of your newest account, and the average age of all accounts.

Credit Mix (10%)

Having a diverse mix of credit types, such as credit cards, retail accounts, installment loans, and mortgage loans, can positively impact your score.

New Credit (10%)

Opening several new accounts in a short period can represent greater risk and may lower your score. Each credit inquiry can slightly decrease your score.

Initial Steps to Improve Your Credit Score for a Mortgage

Before applying for a mortgage, take these foundational steps to improve your credit score:

1. Check Your Credit Reports and Scores

Knowledge is power when it comes to improving your credit score. Start by obtaining your credit reports from all three major bureaus:

• Equifax
• Experian
• TransUnion

You’re entitled to one free report from each bureau annually through AnnualCreditReport.com. Many financial institutions and credit card companies also provide free credit score monitoring.

When reviewing your reports:

• Look for inaccuracies in personal information
• Verify all accounts listed belong to you
• Check for incorrect payment statuses
• Identify any unfamiliar inquiries or accounts that could indicate fraud
• Review negative items such as late payments, collections, or judgments

2. Dispute Errors and Inaccuracies

Credit report errors are surprisingly common. If you find inaccuracies, dispute them immediately by:

1. Contacting the credit bureau directly (online, by phone, or by mail)
2. Providing documentation to support your claim
3. Following up on your dispute (bureaus have 30 days to investigate)
4. Contacting the creditor directly if necessary

The Federal Trade Commission (FTC) provides sample dispute letters on their website to help you navigate this process. According to the Consumer Financial Protection Bureau, one in five Americans has an error on their credit report that might affect their score.

3. Register on the Electoral Roll

While this step is more relevant in the UK, in the US, keeping your voter registration up to date can help verify your identity and address stability, which indirectly supports your overall creditworthiness.

4. Address Collections and Negative Items

If you have collections or negative items on your report:

• Consider paying off collections accounts (newer FICO models don’t factor in paid collections)
• Negotiate with creditors for “pay for delete” arrangements
• If you have legitimate financial hardships, write goodwill letters explaining your situation

Be aware that negative information can stay on your credit report for up to seven years, but the impact on your score diminishes over time.

Strategies to Improve Your Credit Score Before Applying for a Mortgage

Implementing these strategies can help boost your credit score significantly before you apply for a mortgage:

1. Pay All Bills on Time

Payment history is the most significant factor in your credit score. To maintain a perfect payment record:

• Set up automatic payments for minimum amounts due
• Create calendar reminders for bill due dates
• Consider using budget apps that track and alert you about upcoming payments
• Contact creditors immediately if you’re going to be late with a payment

Even a single late payment can drop your score by up to 100 points, so this is non-negotiable if you want to maximize your score.

2. Reduce Credit Card Balances

Credit utilization has a major impact on your score. To improve this metric:

• Pay down credit card balances to below 30% of your credit limits
• Focus on cards with the highest utilization rates first
• Consider making multiple payments throughout the month
• Avoid closing unused credit cards before applying for a mortgage

A study by FICO found that consumers with scores over 800 typically use less than 10% of their available credit.

3. Avoid Opening New Credit Accounts

Each new credit application results in a hard inquiry on your credit report, which can temporarily lower your score. In the months leading up to your mortgage application:

• Avoid applying for new credit cards or loans
• Postpone major purchases that require financing
• If you need to open a new account, do so at least six months before applying for a mortgage

The exception is rate shopping for your mortgage itself. FICO treats multiple mortgage inquiries within a 45-day window as a single inquiry.

4. Maintain Existing Credit Accounts

The length of your credit history impacts your score, so:

• Keep older accounts open and active
• Use each credit card occasionally to prevent the issuer from closing it
• Don’t close old accounts, even if you’ve paid them off

Credit scoring models consider the average age of all your accounts, so closing old accounts can actually lower your score.

5. Become an Authorized User

If you have limited credit history, becoming an authorized user on someone else’s account (like a parent’s or spouse’s) can help you build credit faster. Make sure:

• The primary account holder has excellent payment history
• The account has a low utilization ratio
• The issuer reports authorized users to the credit bureaus

This strategy can be particularly effective for first-time homebuyers with thin credit files.

Advanced Tactics to Boost Your Credit Score

For those looking to maximize their credit score before applying for a mortgage, consider these advanced strategies:

1. Strategically Manage Credit Utilization

Beyond simply reducing balances, you can optimize your utilization by:

• Requesting credit limit increases (without hard inquiries)
• Paying down balances before statement closing dates
• Spreading balances across multiple cards rather than concentrating on one
• Using a personal loan to consolidate credit card debt (this can improve your credit mix and lower utilization)

Studies show that consumers with the highest credit scores typically maintain utilization below 10% across all accounts.

2. Rapid Rescoring

If you’re in the process of getting a mortgage and need a quick boost to your score, ask your lender about rapid rescoring. This service, which costs a few hundred dollars, can:

• Update your credit report in days rather than weeks
• Incorporate recent positive changes like debt payoffs
• Potentially raise your score enough to qualify for better rates

Not all lenders offer this service, so ask about it specifically if you’re on the borderline between rate tiers.

3. Use Experian Boost or Similar Services

Experian Boost allows you to add utility payments, phone bills, and streaming services to your Experian credit report. This can help improve your score by:

• Adding positive payment history to your report
• Increasing the number of accounts with good payment history
• Potentially adding length to your credit history

While this only affects your Experian score, many mortgage lenders use this bureau, so it can still be beneficial.

4. Diversify Your Credit Mix

Having a mix of different types of credit can positively impact your score. Consider:

• Having one or two credit cards
• An auto loan
• A small personal loan
• A retail account

Don’t open new accounts just for this purpose if you’re applying for a mortgage soon, but if you already have a diverse mix, maintain it.

5. Pay Down Installment Loans

While revolving credit utilization has a larger impact on your score, paying down installment loans like student loans or auto loans can also help by:

• Reducing your overall debt load
• Improving your debt-to-income ratio (which matters for mortgages)
• Demonstrating responsible management of various types of credit

Even paying a loan down to below 89% of the original balance can have a positive impact on your score.

Avoiding Common Pitfalls

As you work to improve your credit score, be careful to avoid these common mistakes:

1. Closing Old Credit Accounts

Closing old accounts can hurt your score by:

• Reducing your available credit (increasing utilization)
• Shortening your average account age
• Potentially removing positive payment history

Keep old accounts open with occasional small purchases to maintain activity.

2. Applying for Multiple New Credit Accounts

Each application typically results in a hard inquiry, which can lower your score. Multiple applications in a short time can signal financial distress to lenders.

3. Mismanaging Joint Accounts

Joint accounts appear on both parties’ credit reports. If you share accounts with someone who mismanages credit, it can damage your score too. Monitor joint accounts closely and address issues promptly.

4. Ignoring Small Collections

Even small collection accounts can significantly impact your score. Don’t dismiss a collection because the amount is minimal—address it promptly.

5. Neglecting Your Credit Monitoring

Credit reports can change frequently. Set up credit monitoring to receive alerts about changes to your credit report so you can address issues promptly.

Special Circumstances and Their Impact on Credit Scores

Certain life events and financial situations can create unique challenges for your credit score:

Dealing with Bankruptcy or Foreclosure

Bankruptcies and foreclosures severely impact your credit score, but recovery is possible:

• Chapter 7 bankruptcy remains on your report for 10 years
• Chapter 13 bankruptcy and foreclosures remain for 7 years
• Focus on rebuilding with secured credit cards and timely payments
• Consider FHA loans, which may be available 2 years after bankruptcy discharge

Managing Student Loans

Student loans can affect your mortgage application in several ways:

• Payment history impacts your credit score
• Loan balances affect your debt-to-income ratio
• Consider income-driven repayment plans to lower monthly payments
• Explore student loan forgiveness programs if eligible

Recovering from Identity Theft

If you’ve been a victim of identity theft:

• Place a fraud alert or credit freeze on your reports
• File a police report and an FTC identity theft report
• Dispute fraudulent accounts and inquiries
• Consider extended fraud alerts that last for seven years

First-Time Homebuyers with Limited Credit

If you’re a first-time buyer with limited credit history:

• Start building credit at least a year before applying for a mortgage
• Consider becoming an authorized user on a family member’s account
• Look into FHA loans, which have more flexible credit requirements
• Explore first-time homebuyer programs in your state

Monitoring and Maintaining Your Improved Credit Score

Once you’ve improved your credit score, maintaining it is crucial, especially throughout the mortgage application process:

Regular Credit Monitoring

Set up a system to monitor your credit regularly:

• Use free services like Credit Karma or Mint
• Check if your bank or credit card offers free credit score access
• Consider paid services that monitor all three bureaus if you’re actively preparing for a mortgage

Timeline for Credit Score Improvements

Understanding how long improvements take can help set realistic expectations:

• Paying down credit card balances: 1-2 months
• Removing errors from your credit report: 1-3 months
• Recovering from late payments: 12-24 months
• Rebuilding after bankruptcy: 2-5+ years

Maintaining Good Credit Habits During the Mortgage Process

Between application and closing, it’s crucial to:

• Make all payments on time
• Keep credit card balances low
• Avoid opening new accounts
• Don’t make large purchases on credit
• Don’t close any accounts

Lenders will often check your credit again just before closing, and changes could jeopardize your approval.

How a Better Credit Score Translates to Better Mortgage Terms

Understanding the tangible benefits of improving your credit score can provide motivation throughout the process:

Interest Rate Advantages

A higher credit score can lead to significantly lower interest rates:

• A 100-point improvement in your score could save you 0.5-1% on your interest rate
• On a $300,000 mortgage, a 0.5% rate reduction saves about $30,000 over 30 years
• Lower rates mean lower monthly payments and more affordable homeownership

Down Payment Requirements

Your credit score affects how much you’ll need to put down:

• Conventional loans may require higher down payments for lower credit scores
• FHA loans require 3.5% down with a 580+ score, but 10% for scores between 500-579
• Some first-time homebuyer programs offer down payment assistance for those with good credit

Private Mortgage Insurance (PMI)

PMI is required for conventional loans with less than 20% down, but your credit score affects the cost:

• Higher scores result in lower PMI premiums
• The difference in PMI costs between a 640 and 740 score could be thousands over the life of the loan
• Better scores can help you eliminate PMI sooner

Loan Program Eligibility

A higher score opens up more mortgage options:

• Conventional loans become available at 620+
• Better rates and terms at 700+
• Jumbo loans typically require 700+ scores
• Portfolio loans with unique features often require higher scores

Mortgage-Specific Credit Considerations

When applying for a mortgage, there are some specific credit considerations to keep in mind:

Mortgage Credit Pulls vs. Other Inquiries

FICO treats mortgage inquiries differently than other credit inquiries:

• Multiple mortgage inquiries within a 14-45 day period (depending on the scoring model) count as a single inquiry
• This allows you to shop for the best mortgage rates without repeatedly damaging your score
• Auto and student loan inquiries are treated similarly, but credit card applications are not

When rate shopping, try to complete all applications within a 14-day window to minimize the impact on your score.

Debt-to-Income Ratio and Its Relationship with Credit

While not directly part of your credit score, your debt-to-income (DTI) ratio is another crucial factor in mortgage approval:

• Lenders typically prefer a DTI below 43% for qualified mortgages
• Lower credit scores may require lower DTIs to compensate for the increased risk
• Reducing debt improves both your DTI and credit utilization
• Higher credit scores may allow for slightly higher DTIs in some cases

To calculate your DTI, divide your total monthly debt payments by your gross monthly income.

Mortgage Underwriting and Credit Score Stability

Mortgage underwriters look beyond just the credit score number:

• They analyze your credit history and patterns
• Recent negative items have a greater impact than older ones
• Stability is valued—avoid opening accounts or significantly changing spending patterns before or during the application process
• Lenders may require written explanations for recent credit inquiries or negative items

Your credit score needs to remain stable throughout the underwriting process, from application to closing.

Authorized Users vs. Co-Borrowers

Understanding the credit implications of different borrowing arrangements is important:

• Authorized users benefit from the primary account holder’s credit without legal responsibility for the debt
• Co-borrowers are equally responsible for the loan and their credit histories have equal weight
• Co-signers are responsible for the loan but may not have ownership rights to the property
• Adding a co-borrower with strong credit can help approval odds but doesn’t directly improve your personal credit score

Timeframe for Credit Score Improvement

Improving your credit score takes time, and setting realistic expectations is important:

Quick Wins (1-3 Months)

Some credit improvements can happen relatively quickly:

• Correcting errors on your credit report: 30-90 days
• Paying down credit card balances: Reflected within 1-2 statement cycles
• Becoming an authorized user on a well-established account: 30-60 days
• Rapid rescoring through a mortgage lender: 2-5 days

Medium-Term Improvements (3-12 Months)

Other strategies take more time to significantly impact your score:

• Establishing consistent on-time payment history: 6+ months
• Reducing overall debt load: 3-6 months
• Letting hard inquiries age: Inquiries impact your score for 12 months
• Building credit mix with new account types: 6+ months

Long-Term Recovery (1-7+ Years)

Recovering from major negative items requires patience:

• Late payments remain on your report for 7 years
• Collections remain for 7 years from the date of the first delinquency
• Chapter 13 bankruptcies remain for 7 years
• Chapter 7 bankruptcies remain for 10 years
• Foreclosures remain for 7 years

The impact of these items diminishes over time, especially if you maintain positive credit behaviors.

State-Specific Mortgage and Credit Score Programs

Many states offer programs to help homebuyers, particularly those who might face credit challenges:

First-Time Homebuyer Programs

Most states have programs offering:

• Down payment assistance
• Closing cost assistance
• Below-market interest rates
• Reduced PMI requirements
• Credit score flexibility

State Housing Finance Agencies

State housing finance agencies often provide:

• Educational resources for credit improvement
• Special loan programs with more lenient credit requirements
• Financial counseling services
• Regional housing assistance programs
• Homebuyer tax credits

Community Development Financial Institutions (CDFIs)

These institutions focus on serving communities that traditional banks might overlook:

• May offer mortgages with lower credit score requirements
• Often provide financial education and counseling
• Can help build or repair credit before applying for a mortgage
• May offer special products for specific communities or neighborhoods

Industry Expert Insights on Credit Scores and Mortgages

Financial experts and mortgage professionals offer valuable perspectives on improving credit for mortgage applications:

From Mortgage Brokers

Experienced mortgage brokers recommend:

• Begin improving your credit at least six months before applying
• Don’t pay off installment loans (like car loans) early if you need to build credit history
• Consider consulting with a mortgage broker before paying off collections (sometimes it’s better to leave old collections unpaid)
• Get pre-approved before house hunting so you know exactly what needs improvement

From Credit Counselors

Certified credit counselors advise:

• Take advantage of nonprofit credit counseling agencies for personalized advice
• Consider debt management plans if you’re struggling with high credit card balances
• Understand how specific actions will affect your particular credit profile
• Be wary of credit repair companies that promise quick fixes or charge high fees

From Financial Advisors

Financial planning professionals suggest:

• Balance credit improvement against other financial goals like saving for a down payment
• Consider how a mortgage fits into your overall financial plan
• Don’t drain emergency savings to pay down debt right before buying a home
• Look at the total cost of homeownership, not just the mortgage payment

Real-World Credit Improvement Success Stories

Learning from others who’ve successfully improved their credit scores can provide both inspiration and practical strategies:

Case Study 1: From 580 to 680 in 8 Months

Sarah, a first-time homebuyer in Colorado, improved her score by 100 points by:

• Disputing three errors on her credit report
• Paying down credit card balances from 75% to below 20% utilization
• Setting up automatic payments for all bills
• Becoming an authorized user on her mother’s long-standing credit card

This improvement qualified her for a conventional loan instead of an FHA loan, saving her thousands in mortgage insurance.

Case Study 2: Recovering from Bankruptcy

Michael filed for Chapter 7 bankruptcy in 2020. By 2023, he had:

• Obtained two secured credit cards and used them responsibly
• Never missed a payment on his car loan or other obligations
• Maintained utility and rent payments that were reported through services like Experian Boost
• Built an emergency fund to avoid future credit problems

His score improved from 520 post-bankruptcy to 670 after 3 years, qualifying him for an FHA loan.

Case Study 3: Overcoming Identity Theft

Jennifer discovered unauthorized accounts on her credit report that dropped her score by 150 points. She:

• Filed an identity theft report with the FTC
• Placed fraud alerts and then credit freezes on all three bureaus
• Worked with the credit bureaus to remove fraudulent accounts
• Documented every conversation and followed up persistently

After four months of effort, her score returned to 760, and she qualified for a jumbo loan with favorable terms.

Digital Tools and Resources for Credit Improvement

Technology has made credit monitoring and improvement more accessible than ever:

Credit Monitoring Apps

Popular credit monitoring services include:

• Credit Karma: Free credit scores, monitoring, and personalized recommendations
• Experian: Access to your Experian score and report with monitoring alerts
• myFICO: Paid service offering true FICO scores from all bureaus
• Credit Sesame: Free credit score monitoring with identity theft protection

Budgeting and Financial Management Tools

These tools can help you manage finances to improve your credit:

• Mint: Free budgeting to track expenses and avoid missed payments
• YNAB (You Need A Budget): Helps create spending plans to pay down debt
• Personal Capital: Tracks investments and debt in one place
• Zeta: Specifically designed for couples managing finances together

Debt Payoff Calculators and Simulators

These tools can help you create a strategic debt reduction plan:

• Undebt.it: Debt snowball and avalanche calculators
• Credit Karma’s Debt Repayment Calculator: Shows how different payment strategies affect payoff time
• myFICO Score Simulator: Shows how different actions might impact your score
• Bankrate’s Mortgage Calculator: Helps understand how credit score affects mortgage costs

Conclusion: Your Roadmap to Credit Success

Improving your credit score for a mortgage is not a one-size-fits-all process. It requires a tailored approach based on your unique financial situation, timeline, and goals. By understanding how credit scores work and how they specifically impact mortgage applications, you can make strategic decisions that have the greatest positive impact on your homebuying journey.

Key Takeaways for Mortgage Credit Success

• Start early: Begin working on your credit at least 6-12 months before applying for a mortgage
• Focus on the biggest factors first: Payment history and credit utilization have the most significant impact
• Be strategic during the mortgage process: Maintain credit stability from application through closing
• Consider your complete financial picture: Balance credit improvement with saving for a down payment and other homebuying costs
• Understand mortgage-specific credit requirements: Different loan programs have different minimum credit score thresholds

Your Long-Term Credit Strategy

Beyond just qualifying for a mortgage, developing healthy credit habits will serve you well throughout your homeownership journey:

• Continue monitoring your credit after getting your mortgage
• Consider the credit implications of other homeownership decisions, like home equity loans or refinancing
• Maintain emergency savings to avoid credit issues during unexpected financial challenges
• Regularly review your financial goals and adjust your credit strategy accordingly
• Consider how improving your credit might help you eliminate PMI sooner through refinancing

Taking the Next Step

Now that you understand how to improve your credit score for a mortgage, it’s time to put this knowledge into action. Begin by checking your current credit reports and scores, identifying areas for improvement, and creating a personalized credit improvement plan with specific goals and timelines.

Remember that patience and consistency are key. Small, positive actions taken consistently over time will yield significant results. With determination and the right strategies, you can achieve the credit score you need to secure the home of your dreams at terms you can comfortably afford.

Frequently Asked Questions

How long does it take to improve my credit score for a mortgage?

Meaningful improvement typically takes 3-6 months for minor issues and 1-2 years for major issues like bankruptcy or foreclosure. The more serious the credit issues, the longer recovery takes. For best results, start working on your credit at least a year before applying for a mortgage.

Will checking my own credit score lower it?

No. Checking your own credit creates a “soft inquiry” that doesn’t affect your score. Only “hard inquiries” initiated by lenders when you apply for credit can lower your score slightly.

How many points will my credit score increase if I pay off a collection?

The impact varies widely depending on your overall credit profile and the scoring model used. Newer FICO models (FICO 9) ignore paid collections, potentially increasing your score significantly. Older FICO models (still used by many mortgage lenders) consider collections even if paid, though the impact diminishes over time.

Should I close credit cards I don’t use before applying for a mortgage?

Generally, no. Closing cards reduces your available credit, which can increase your utilization ratio and potentially lower your score. It can also reduce the average age of your accounts. Keep unused cards open but use them occasionally for small purchases to prevent the issuer from closing them due to inactivity.

How does refinancing affect my credit score?

Refinancing typically causes a temporary dip in your credit score due to the hard inquiry and new account. However, consistently making payments on the new loan will gradually improve your score. If refinancing significantly lowers your interest rate or monthly payment, the long-term financial benefits usually outweigh the temporary credit impact.

Does rent payment history affect my credit score for a mortgage?

Traditionally, rent payments weren’t reported to credit bureaus. However, services like Experian RentBureau, Rental Kharma, and LevelCredit now allow rent payments to be reported. Some newer credit scoring models include rent payment history when available, though many mortgage lenders still use older models that don’t consider rent payments.

What’s more important for a mortgage—credit score or debt-to-income ratio?

Both are crucial, but they serve different purposes in the approval process. Your credit score determines whether you meet the minimum requirements and what interest rate you’ll receive. Your debt-to-income ratio helps determine how much house you can afford. Lenders consider both factors alongside your down payment, employment history, and asset reserves.

How do medical collections affect my mortgage application?

Recent credit scoring models like FICO 9 and VantageScore 4.0 give medical collections less weight than other types of collections. However, many mortgage lenders still use older FICO models that treat all collections similarly. If possible, try to resolve medical collections before applying for a mortgage, even if that means setting up a payment plan.

Can I get a mortgage with no credit history?

Yes, but it’s challenging. FHA loans allow for “non-traditional credit” like rent and utility payment history. Some lenders offer manual underwriting for borrowers with no credit score but strong payment history on non-reported accounts. Another option is finding a creditworthy co-signer. Building at least some credit history before applying for a mortgage is strongly recommended.

How do loan modifications or forbearance affect my ability to get a mortgage?

Most loan modifications appear on your credit report and may temporarily lower your score. Mortgage forbearance related to COVID-19 shouldn’t negatively affect your credit if properly reported by lenders. However, many mortgage programs require a waiting period (often 12 months of on-time payments) after a loan modification before you can qualify for a new mortgage.