How to get your credit ready for a home, a car, or a loan
When you’re planning to make a big purchase that requires credit, your credit report really matters. It can decide whether you're approved or denied for a loan, and whether your interest rate is affordable or not. If you’re planning for something big, the sooner you start working on your credit, the better.
Not sure if your credit is in shape? The first step is to review your file to see what a lender would see.
How much time do you need?
This depends on how much you’re planning to borrow, who the lender is, and the shape your credit is in today, and whether your goal is to simply get approved or get the best rate. Here are some timelines we typically recommend:
- Get a car or personal loan.
A month or two can matter. Lenders look at recent payments and at how much of your available credit you're using.
- Rent an apartment.
Two to three months. Many landlords care less about the number than about whether anything on the report worries them.
- Apply for a mortgage or business loan.
Six months to a year, and longer if there are collections on your file. Mortgage lenders use stricter scoring, and a dispute takes at least thirty days. More on getting mortgage ready and credit for a car loan.
If your application is three weeks out, be honest with yourself about what's possible. We'd rather tell you now than take your money and have you find out in month two that your credit won’t be in shape by the time you apply.
What not to do
There are a few things to avoid while you're preparing to apply.
Don't open new accounts. Every application leaves a mark on your report, and a new account pulls down the average age of your credit. Both of those make you look less settled to a lender.
Don't close old cards. This might seem tempting, but a card you never use still adds to your total available credit, which keeps your utilization low. It also keeps your history long.
Don't wait for the due date to pay your bills. Most card companies report the balance on your statement, which closes a few weeks before your payment is due. Pay it down before the statement closes, and a lower balance gets reported.
How to shop for rates while protecting your credit
Shop rates in a tight window. Apply to several mortgage or auto lenders within 2-6 weeks of each other and the scoring systems count it as one application (opens in a new tab), as long as the applications fall close together.
Ask your mortgage lender about a rapid rescore. If you pay down a balance or fix an error while your loan is in progress, your lender can send proof to the bureaus and ask them to update your report, usually within a week. Your score doesn't normally update that fast on its own.
Your rights while you get ready to apply
Free credit reports. Federal law gives you a free report from each of the three bureaus every year, and you can now get them free every week at AnnualCreditReport.com (opens in a new tab). Checking your own reports doesn't affect your scores.
The right to dispute errors. You can dispute anything wrong on your report with the bureau for free. The bureau generally has 30 days to look into it (opens in a new tab), sometimes 45, and has to correct or delete anything that's wrong or can't be verified.
Your score from a mortgage lender. If you apply for a home loan and the lender uses a credit score, it has to give you that score (opens in a new tab) and up to four key factors that hurt it.
There are additional options available, but which ones apply to you will depend on your individual history. We'll review your history together to determine which options are most appropriate for your situation.
Where we start
Our free review pulls your credit report and we go through it with you, explaining what lenders look for. Then we build a personalized plan to restore and / or build your credit on your timeline. If your credit is already in good shape, we'll tell you that.
See your credit like a lender would
We’ll show you exactly what’s on your file and what lenders look for when evaluating borrowers.
This is a soft credit pull, so it won’t impact your score.