How to fix credit to buy a house

Your credit score is one of the most important factors in qualifying for a mortgage and determining how much it will cost. If yours isn’t perfect, you’re not alone. Learn the steps that can help you boost your credit score and qualify for a mortgage and a lower interest rate.

Key takeaways:

• Raising your credit score helps you qualify for more loan programs, better interest rates, and lower overall borrowing costs.

• Paying bills on time, reducing credit card balances, and avoiding new debt can steadily improve your credit profile.

• First-time buyers don’t need perfect credit to get started. Many loan programs allow flexibility, making it possible to prepare for homeownership while continuing to build stronger credit.

What credit score do you need to buy a house?

You do not need perfect credit to buy a home, but you will need to meet the minimum credit set by your lender for your loan type. While exact credit requirements can vary depending on the lender, loan type, and your down payment size, here are some typical credit score minimums you’d need to meet to get one of the following common loan types:

• Conventional loan: Fannie Mae and Freddie Mac no longer require a minimum credit score for conforming conventional loans. Lenders will consider your overall credit history and may overlay their own requirements.
• FHA loan: Lenders, including Rocket Mortgage, require a credit score of 580 and a down payment of at least 3.5% for an FHA loan. Other lenders may allow a score between 500 and 579 with at least 10% down.^1,2
• VA loan: VA loans require no minimum credit score, though lenders may overlay their own requirements.³
• USDA loan: USDA loans require no minimum credit score, though lenders often require a score of at least 620 – 640.

How mortgage lenders use credit

Lenders evaluate your credit to gauge how much risk you pose as a borrower, deciding whether to approve your loan application and how much interest to charge. The higher your score, the better your odds of getting a mortgage at a low rate.

How credit scores are calculated

Credit scores range from 300 to 850 and are typically grouped into the following ranges:

• 800 plus: Excellent (or exceptional)
• 740 – 799: Very good
• 670 – 739: Good
• 580 – 669: Fair
• 300 – 579: Poor

Credit scores are calculated using five primary scoring factors:

• Payment history (35%): Your track record of making payments on time.
• Amounts owed (30%): The percentage of available credit you are actively using.
• Length of credit history (15%): The average age of your open credit accounts.
• New credit (10%): Recent hard inquiries and newly opened accounts.
• Credit mix (10%): The variety of revolving credit and installment loans you maintain.

The average score in 2025 was 713, which is good but not exceptional. If you have a credit score around that level, you’ll likely qualify for a variety of loan options.

How bad credit can affect your mortgage application

Let’s look at how poor or insufficient credit can affect your home loan options.

Loan options may be limited

Fair or poor credit can make it difficult to qualify for a mortgage. If you can’t qualify for a conventional loan, you may be able to qualify for an FHA loan, which some lenders will fund with a minimum score of 500 and a 10% down payment. Scores below 500 generally make it difficult to obtain a mortgage until the credit file is strengthened.

Interest rates and monthly payments may be higher

Lenders decide which credit score to use to gauge your risk, then price loans with higher rates for lower scores. Even a fraction of a percent increase in your mortgage rate can add tens of thousands of dollars in total interest over a 30-year loan term and significantly increase your monthly payment.

Debt-to-income ratio also matters

In addition to your credit score, lenders also assess your debt-to-income (DTI) ratio. This figure represents the percentage of your monthly income that goes toward paying debt. If you have a significant amount of debt consuming your income, it can make it difficult to qualify for a mortgage.

How to fix credit to buy a house

If you want to improve your score before you buy a home, it will take some time. Here are several steps you can take to improve your credit.

Check all 3 credit reports and dispute errors

Knowing what your credit report looks like and what’s hurting your score will tell you what you should be working on.

You can check your credit with each major credit bureau – Experian®, Equifax®, and TransUnion® – once per week for free at AnnualCreditReport.com. However, this service doesn’t include your credit score.

There are many ways to check your credit score, including paying the credit bureau a small fee or using third-party apps. Many financial services and lenders, including banks, will let you check your credit score as part of their service.

Keep an eye out for any errors or accounts in your report that don’t belong to you. If you find errors, dispute them with the credit agency and get them removed. You might see your score rise quickly if you remove incorrect, negative information.

Pay down credit card balances and lower utilization

Your credit utilization ratio is how much of your available credit you’re using. It accounts for 30% of your credit score, so paying down your debts makes a big difference.

A lower credit utilization ratio can help you get a lower interest rate and save money on your mortgage. Requesting a credit limit increase on existing accounts can also immediately reduce your credit-utilization ratio, provided you do not spend against the new limit.

Make every payment on time

Because payment history represents 35% of your score, consistent on-time payments are essential. It can help to set up automatic payments for at least the minimum amount due on all credit accounts. Making all your monthly payments on time over a longer period can help increase your credit score.

Avoid new credit applications before closing

When you make an application to open a new line of credit, it triggers a hard credit inquiry. This can temporarily reduce your credit score by several points. However, if you avoid opening new credit cards, financing vehicles, or purchasing furniture on credit before closing on your home loan, you can also avoid credit disruptions.

Keep old credit accounts open

Closing old or unused credit cards reduces the length of your credit history, which accounts for roughly 15% of your score. It also reduces your total available credit limit and increases your credit utilization ratio. Keeping open accounts active with minor recurring charges paid off monthly can help you boost your credit score.

Build credit if your file is thin

If you have little to no credit history, consider the following credit-building tools:

• Secured credit cards: These require a refundable cash deposit that serves as your credit limit while building a payment history.
• Credit-builder loans: Deposit loan funds into a locked savings account while you make monthly payments reported to credit bureaus.
• Authorized user status: Ask a relative with stellar credit to add you as an authorized user on an established credit card account.

Be careful with credit repair services

Some companies advertise credit repair services that promise to boost your score quickly, but they charge a fee, and many are scams that take your money without meaningfully improving your credit. Research any company carefully before signing up.

The Credit Repair Organizations Act governs these businesses, requiring that they provide proper disclosures to consumers and stopping them from demanding advance payment. If a credit repair company isn’t giving you enough info about how they work or demands payment right now for services rendered at a future date, look elsewhere.

How long does fixing credit take before buying a house?

The time needed to repair credit depends on your starting point and the types of negative entries on your report.

What can improve quickly?

• Dispute corrections: Removing inaccurate credit report errors typically takes roughly 30 days after filing a dispute with the credit bureau.
• Lowering utilization: Paying down high credit card balances usually updates on your credit file within 30 – 60 days, yielding rapid score boosts.

What may take longer?

• Late payments and delinquencies: Late payments remain on your report for up to 7 years.
• Bankruptcies and foreclosures: Serious public records can remain on your report for 7 – 10 years.

Mortgage options if your credit score is low

If you want to buy a home, taking the time to improve your credit score is a good idea. However, repairing your credit can take time. In that case, there are some options for people who may not have stellar credit, such as FHA, VA, and USDA loans. Keep in mind that Rocket Mortgage does not offer USDA loans but does offer FHA and VA loans.

FHA loans for buyers with low credit scores

A Federal Housing Administration (FHA) loan is a government-backed mortgage. These loans come from regular lenders but are partially insured by the FHA, which reduces the risk that lenders face.

That means that lenders can offer loans to people with lower credit scores. Lenders, including Rocket Mortgage, require a minimum credit score of 580 with a down payment of 3.5%. Other lenders’ FHA down payment requirements allow a credit score between 500 and 579 with a down payment of 10%.

There are some drawbacks, such as limits on the amount you can borrow and having to pay upfront and annual mortgage insurance premiums (MIP) that can be hard to eliminate, but FHA loans are a good option for people with lower scores who want to buy a home.

VA loans for eligible military personnel and veterans

Another option if you qualify is a Veterans Affairs (VA) loan. VA loans are only available for eligible military personnel, veterans, and their qualifying surviving spouses.

For example, VA loans have no down payment requirements, limited closing costs, no PMI payments, and competitive rates.

The VA also does not set a minimum credit score, but many lenders set their own minimum requirement. That requirement is usually lower than the minimum for conventional loans due to the insurance offered by the VA.

USDA loans for rural property buyers

If you’re buying a home in a rural area, you may be able to apply for a U.S. Department of Agriculture (USDA) loan. While Rocket Mortgage doesn’t offer USDA loans, they can be a great fit if you’re looking in qualifying areas.

A few notes about how USDA loans are issued: The USDA does not set minimum credit score requirements, but borrowers must be able to show that they can handle and manage the debt. Generally, these loans come from private lenders, which may set their own requirements.

Other key details of USDA loans include:

• Applicants must make no more than 115% of the median household income
• Closing costs of 3% – 6% of the loan amount
• Only for principal residence
• No down payment required
• Competitive rates

FAQ

Let’s look at the answers to some more frequently asked questions about buying a home with less-than-perfect credit.

How do you increase your credit score quickly?

The best way to boost your credit score quickly is to pay down your existing debts. The amount you owe makes up almost one-third of your credit score, so paying off debts can give your score a big boost.

What habits tend to lower your credit score?

Your payment history and the amount you owe make up nearly two-thirds of your credit score. That means that missing monthly payments and carrying a large amount of debt will both tend to damage your credit.

The bottom line: Fixing credit to buy a house takes time

Your credit is a key factor in qualifying for a mortgage and determining what you’ll pay for it. If you want to buy a home, it’s worth the effort to improve your credit. Start with the basics: pay down debt, make every payment on time, and correct any errors on your report.

Once you’re ready to start shopping for a home, you can begin the mortgage process by getting preapproved with Rocket Mortgage.

¹Rocket Mortgage is not acting on behalf of FHA or HUD.

²To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

³Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements.

Rocket Mortgage is a trademark or service mark of Rocket Mortgage LLC or its affiliates.