Smart Credit Moves to Secure a Better Mortgage in 2026

If purchasing a home or refinancing your mortgage is on your radar this year, focus on your credit score. It should be front and center. In today’s rate environment, every fraction of a percent matters. Strong credit can help you qualify. It can secure a lower rate. Ultimately, you can save thousands over the life of your loan.

Credit Timeline for Mortgage Readiness

6+ Months Out: Start paying down high balances, dispute any credit report errors, avoid opening new accounts

3-6 Months Out: Continue consistent on-time payments, keep utilization below 30%, track your progress

30 Days Before Applying: Freeze all new credit applications, postpone major purchases, let your credit history stabilize

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1. Pay Every Bill on Time — No Exceptions

Payment history remains the top factor in your credit score calculation, accounting for approximately 35% of your FICO score. A single 30-day late payment can cause a significant dip of 60-110 points. This is especially true if you’re preparing to apply for a mortgage. Set up automated payments or digital reminders so nothing slips through the cracks.

2. Tackle Balances and Reduce Your Credit Utilization

Using too much of your available credit signals risk to lenders. Credit utilization is important because it accounts for about 30% of your score. It is totaled both per card and across all your accounts.

Aim to keep balances below 30% of your limits, though under 10% is ideal for the best mortgage rates. First, focus on paying down cards that are closest to their limits. These cards have the biggest impact on your score. Even small, steady payments can make a measurable difference. This typically occurs within 3-6 months. It is the usual time frame for meaningful credit improvement.

3. Monitor Your Credit Reports for Errors or Fraud

You can access free reports from all three major bureaus (Experian, Equifax, and TransUnion) each week at AnnualCreditReport.com. Checking consistently helps you catch:

• Incorrectly reported late payments or accounts that don’t belong to you
• Duplicate accounts showing the same debt multiple times
• Identity theft or unauthorized credit inquiries
• Accounts that should have been removed after disputes

Disputing errors early helps protect your score before you apply. The bureaus typically have 30 days to investigate disputes, so don’t wait until the last minute.

4. Skip New Credit Until After Your Loan Closes

Credit card approvals, car loans, and store financing all trigger hard inquiries. Each of these actions temporarily lower your score by 5-10 points. More importantly, new accounts reduce your average account age and can raise red flags during the mortgage underwriting process.

If a mortgage or refinance is coming, press pause on new accounts. Let your history continue working in your favor.

5. Preserve Older Accounts

Length of credit history accounts for about 15% of your score. Closing long-held cards shortens your average account age and can increase your overall utilization overnight if you’re carrying balances elsewhere.

Keep older accounts open when you can — especially those with no annual fees. If you’re concerned about unused cards, charge a small recurring bill to each one. Set up autopay to keep them active.

6. Postpone Major Purchases and Big Debts

Large new loans can change your debt-to-income ratio, which lenders analyze closely in today’s tighter lending environment. Your DTI is the percentage of your monthly gross income that goes toward debt payments. It can make or break your mortgage approval even if your credit score is strong.

If it’s not urgent, wait until after closing day for car upgrades, personal loans, or furniture financing. Lenders often pull credit again right before closing. A new car payment could derail your approval at the finish line.

Understanding Credit Score Targets

Not all credit scores are treated equally in the mortgage world. Here’s what lenders typically look for:

• 740+: Qualifies for the best mortgage rates and terms
• 700-739: Good rates, though not the absolute best
• 660-699: Higher rates and stricter requirements
• 600-659: Conventional loan minimum; expect higher rates
• Below 620: May need FHA financing (580 minimum) or significant down payment

Remember that lenders typically use your middle score from all three bureaus, not your highest. If your scores are 720, 695, and 710, they’ll use 710 for qualification purposes.

Final Thought

Your credit score plays a crucial role when you’re gearing up to buy a first home. It also matters when upgrading your space or refinancing for better terms. Keep consistent and careful credit habits today. This can put you in a stronger position to unlock better rates. You can achieve lower payments and more lending options whenever you’re ready to make your move in 2026.

Start early, stay disciplined, and remember that meaningful credit improvement typically takes 3-6 months of consistent effort. Lower interest rates can save you tens of thousands of dollars over the life of your loan. Every point of credit score improvement is worth the effort.