To address a credit score that hinders home purchase, first review and dispute inaccuracies on credit reports via . Pay down credit utilization to below 30% of limits, as high balances significantly impact scores. Consider becoming an authorized user on a trusted person’s account with good history, and secure a credit-builder loan or secured credit card to demonstrate responsible behavior. refinancing options or adjustable-rate mortgages (ARMs) may also lower borrowing costs temporarily.

These steps are effective because credit scores primarily reflect payment history (35% of FICO score) and credit utilization (30%). Reducing balances below 30% utilization can raise scores by up to 100 points within 6-12 months, per myFICO data. authorized user status can boost scores if the primary user has perfect history, while secured cards or credit-builder loans rebuild payment history. The Federal Reserve reports that a 50-point score increase raises mortgage approval odds by 40%, and timely payments can add 20-50 points over a year. For example, a person with a 650 score improving to 700 could qualify for a 3.5% mortgage rate (vs. 4.5% at 650), saving $50 monthly on a $300,000 loan. Additionally, the Consumer Financial Protection Bureau notes that 25% of consumers don’t realize small score improvements significantly affect loan terms. Proactive credit management typically resolves barriers within 6-12 months, aligning with typical mortgage pre-approval timelines.