How to Improve Your Credit Score To Buy A House: Answers, Resources

Following is a great overview on how to improve your credit score from Houston Mortgage Provider Bobby Yu.

Five main categories go into making up your overall credit score calculation. Let’s briefly review each category and how much they count:

1. Payment History – The Most Important Category

This category is pretty self-explanatory. It doesn’t take a rocket scientist to figure out that if you pay your bills on time, you’ll do well in this category. Likewise, if you have a history of late payments, collections, charge-offs, public records, etc. – you’re not going to do so well in this category.

In addition, the number of negative items on your credit reports is important. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.

2. Debt – A Very Close Second

The most important non-payment category in your credit score is, by far, the amount of debt that you carry. And while your installment debt (auto loans and mortgages) are factored into your scores, it’s really your credit card debt that’s most important.

This includes anything from Visa, MasterCard, Discover, American Express, gas cards and/or retail credit cards like Macy’s or Target. The balances that you carry on your credit cards can affect your scores almost as much as whether or not you make your payments on time.

This category calculates the proportion of balances to credit limits on your revolving credit card accounts – also referred to as ‘revolving utilization’. Simply put, the higher your revolving utilization percentage, the fewer points you will earn in this category.

So what is revolving utilization and how is it calculated?

To determine your revolving utilization, you’ll need to add up all of your current balances and all of your current credit limits on your open revolving credit accounts (except for Home Equity Lines of Credit). This will give you a total balance and a total credit limit. Divide the total balances by the total credit limit and then multiply that number by 100. This will give you your total revolving utilization percentage.

See the example provided below:

Remember, the lower your utilization percentage, the more points you’ll earn and the higher your credit score will be. To earn the most possible points in this category, you should try to keep your revolving utilization at 10% or less. If you can’t reach 10%, just remember that the lower the better. While 50% is better than 60%, 40% is better than 50% and so on.

How you pay your bills and your revolving utilization are by far the most important factors used to determine your credit scores. They account for 2/3rd of the points in your score. That’s a hefty chunk! Needless to say, if you don’t do well in both of these categories, your scores aren’t going to be very good regardless of how you do in the remaining categories.
While the remaining categories are worth fewer points, they are still very important for consumers who want to earn the highest scores possible, certainly a requirement in today’s difficult credit environment:

3. The Age of Your Credit History – Secondary Category

Don’t confuse this with your age. It’s the age of your credit reports. Basically, the score is looking to see if you have a lengthy history of managing your credit obligations. The age of your credit history is determined by the “date opened” on the oldest account listed on your credit report. The older your credit report, the more points you will earn in this category.

There’s really not much you can do in this category except wait it out. As your reports get older, you will gradually earn more points. This means that you should never try and get old, good accounts removed from your credit reports.

You want the history!

4. New Credit/Inquiries – Secondary Category

When you apply for credit you are giving the lender permission to pull your credit reports and credit scores. Each time this happens, your credit report will reflect what’s called an “inquiry.” To perform well in this category, you should really only apply for credit when you need it.

5. Credit Mix – Secondary Category

What types of accounts do you have? You will do well in this category if you have a nice diverse list of different types of accounts in your credit report. This includes mortgages, auto loans, installment loans, credit cards, etc.

If your credit report is dominated by one type of account (or lack of others), this could negatively affect the number of points that you earn from this category.

That pretty much covers the factors that are used in determining your credit scores. Let’s do a quick recap:

  • How you pay your bills – on time is good, late is bad
  • How much you owe your creditors – keep your credit card debt low (10% utilization is optimal)
  • How long you’ve had credit – the longer the better
  • How often you apply for credit – apply only when you really need it
  • Account mix – diversity is good

If you can stick by these five key principles, you should be well on your way to healthy credit and credit scores.

Find Your Perfect Home

Get More Details

Paige Martin

Our Recent Awards

Why We’re Different

  • #1 Keller Williams Realtor in Houston
  • #1 Keller Williams Realtor in Texas
  • #5 Keller Williams Realtor in the U.S.
  • "One of Houston's Top 25 Realtors," Houston
    Business Journal
  • "One of America's Best Realtors," RealTrends.com / WSJ
  • Over $500 Million in Houston residential home sales
  • We know this market, and this property.
  • We're candid.
  • We'll tell you the "bad' and the "ugly" about any property we show you.
  • Most often, we talk our clients into NOT BUYING.
- Gretchen & Brad Richter- Gretchen & Brad Richter
“We relocated to Texas from out of state 3 years ago, and Paige’s intimate knowledge of Houston neighborhoods, valuations, trends, and pitfalls was simply unmatched. We would never have been able to find our perfect home without her. She was calm and focused when everything seemed most challenging — a true professional and advocate who has become a dear friend. We are grateful to have met her!

Read More

- Peter McGillivray & Jillian Jopling- Peter McGillivray & Jillian Jopling
“Paige demonstrated all qualities you want in a realtor – knowledgeable, attentive, responsive, patient. She put us into our first dream home, and due to that experience, we’ve returned to her time and again for our other real estate needs. You will quickly realize after working with Paige that while she focuses on completing your deal, her endgame is to ensure her clients’ needs are preserved and satisfied.

Read More

- Gail & Ian Mackey- Gail & Ian Mackey
“As first time buyers in the US, we are delighted to have worked with Paige. She is a delight to work with, and I would recommend anyone to enlist her help if you’re looking to either buy or sell a property.

Read More

- Dr. Jen Shroff- Dr. Jen Shroff
“Paige is simply the best. She was patient with us throughout the process and took time to answer all of our questions! She knows so much about the housing market so we felt very confident that we were in great hands!

Read More

- Travis LeConey- Travis LeConey
“Paige has helped my wife and I twice now. I couldn’t think of a better person to have in your corner when buying or selling! She guided us through the process, and made it seem so easy that selling/buying was fun! Paige is a great person, very responsive, and great at what she does. I recommend Paige to all my friends and co-workers. If you are buying or selling in the area Paige covers, give her a call. You won’t regret it!

Read More

- Xavier Refunjol- Xavier Refunjol
“Paige is dedicated, thorough and caring to where you feel you’re their only client. Their best asset is their honesty, based on experience and data. We had a great time buying our first home largely because of them. We would not hesitate to recommend them to anyone.

Read More

- Taylor Lamb- Taylor Lamb
“Paige was wonderful to work with. She was thorough, knowledgeable and patient. I would highly recommend Paige to anyone looking to buy or sell a home.”

Read More

- Jeremy & Lynn Greene- Jeremy & Lynn Greene
“Paige Martin is the best Realtor. She is highly experienced and very knowledgeable. She made our buying experience an enjoyable one, not only for us, but for our daughter, son-in-law and several of our friends. We have bought and sold many houses, and Paige has been the best realtor we have ever worked with. We highly recommend her.

Read More

- Dr. Forrest Roth, MD- Dr. Forrest Roth, MD
“Paige is the best of the best when it comes to real estate! She has bought & sold many properties for us & we couldn't recommend her more highly!

Read More

- Tina Spiller, Chevron- Tina Spiller, Chevron
“I really enjoyed working with Paige on the sale of my townhome. The HAR listing was perfect and went up quickly and the sale was closed within 30 days. I definitely recommend Paige for any real estate transaction.

Read More

Read 100+ Testimonials: LinkedIn for the Best Houston Realtor

What We Can Do For You

CANDID ADVICE

Our promise is to always give you the most candid advice on any property, to help you make the best decision for your family.

EXPERTISE

Having sold over $500M of Houston homes, we've seen the good, bad & ugly and can help you avoid problems.

GREAT DATA

We built a proprietary data analytics package to help give you the best information on any neighborhood, building or home.

NETWORK OF EXPERTS

Built over fifteen years, our network of experts can help you through each step of the process plus help making living in your new home more enjoyable.

Latest Houston Real Estate Stories

Read more Houston real estate updates

Back to Top