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How to Improve Your Credit to Buy a House: How a Homebuyer Overcame Her Credit Challenges

How to Improve Your Credit to Buy a House: How a Homebuyer Overcame Her Credit Challenges
Casey Morris
Home.com Editor

Ebony LaCour never thought she’d have options when it came to buying a house.

“I always thought I’d get a house, but I thought it would be any old thing, just to say I had one,” she says. “I just didn’t have any confidence.”

A nurse and single mother of three, LaCour dreamed of finding a home for her family.

“I had been through a divorce, so I was just a single parent trying to make it,” she says. “I lived so many places before I bought this house. I can’t even tell you how many places, in bad neighborhoods. We were just always spot to spot. But it was always my goal to buy a house.”

What's in this Article?

An opened door
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‘It felt like home’
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How to improve your credit to buy a house
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Frequently asked questions
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Key takeaways
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An opened door

LaCour worried that the hit her finances and credit took when she went through her divorce would prevent her from getting approved for a mortgage. Then, a few days before Thanksgiving, she learned she and her children would have to vacate their current apartment.

Panic-stricken, LaCour scrambled to find another place, fortunately encountering a landlord who was willing to work with her on payments and let her move in right away. She was grateful to have found a place to stay, but she knew her children deserved better.

“It wasn’t a bad area, but it wasn’t where I wanted to live and raise my kids,” she says. “We didn’t have any central air or heat, and we could only afford to get two air conditioners, so it was hot. When it was cold, it was freezing.”

Her kids liked the house because it was bigger than their former home. But LaCour was unhappy.

“Mentally, I was just totally depressed. Looking back on it, I was thankful that we were able to move right before Thanksgiving, but I was just totally depressed,” she recalls.

There was a silver lining, though. 

“I know it was God that opened the door for me to get into that house because that house is what pushed me to try to buy a house and finally do what all I needed to do,” she says.

‘It felt like home’

LaCour’s mother, a Realtor, invited her to a class on getting your credit ready to buy a home, led by Christy Solar, a Fairway loan officer. Despite her initial fears, LaCour followed the steps Solar recommended, including opening a secured credit card and strategically paying down debts.

“When I met Ebony, she was unsure of how long it would take to purchase a home,” Solar recalls. “She had been through a lot personally and financially and her dream was to own a home but she was not sure where to start. We pulled credit and used our CreditTool team to help her create a plan to reach her goal.”

Six months later, LaCour was able to qualify for a loan. Not only that, she didn’t have to choose any old house. She was selective as she toured properties, refusing to entertain any that didn’t feel right for her family.

Then she found the right one.

“As soon as I walked into the house, I didn’t even see the whole house, and I said, ‘This is the house that I want,’” she says. It felt like home, and it had a spacious kitchen – a non-negotiable for LaCour, who loves to cook and entertain.

LaCour was happy with the home immediately, but it took some time for her to share her joy.

“Because I had lived so many places, I guess I felt like I didn’t deserve this and I downplayed the excitement I should have had,” she says.

Two years on, however, LaCour and her children couldn’t be happier in their Monticello, Louisiana home. They recently added a back patio so they can host company and share meals with their loved ones, and she’s not holding back her pride or gratitude in her home anymore.

Although beginning the process was challenging, LaCour says it was worth it: “When you get that clear to close, it’s the best feeling in the world.”

Solar praises LaCour’s determination to follow her dreams.

“Ultimately, Ebony did not let her past obstacles hold her back and she worked so hard to follow the plan. She was committed and determined to reach her goals and she did,” Solar says. “The day of her closing was such a joy because we knew what she had overcome to make this dream a reality. Her determination, positive attitude, and overall commitment to doing the work is the reason she is a homeowner today.”

How to improve your credit to buy a house

Ebony LaCour’s story illustrates an important truth about homebuying: it’s often closer than people realize. Even if you’ve struggled with your credit in the past, there are ways to improve your score and get to a place where you can qualify for a home loan.

9 ways to improve your credit score

Here are some ways to improve your credit score to buy a house:

Ask for help

Like LaCour, you don’t have to figure out how to get your credit homebuying-ready on your own. You can work with a lender that offers guidance on what steps you need to take to get your score to a qualifying number.

For instance, Fairway has educated loan officers and a credit improvement team that can offer personalized credit improvement recommendations based on your report. That’s why it’s worth reaching out to a lender even before you’re ready to buy a house. They can review your credit profile and give you tips and strategies on how to give yourself the best chance of qualifying.

Check your mortgage credit score

Plenty of free sites and apps offer a free credit score service. But in many cases, they aren’t showing you your FICO score – the score that lenders look at when you apply for a mortgage.

To check your FICO score, you can sign up for ScoreGenius, Home.com’s free credit score tool. In addition to checking your score, you can also gain tips and insights on how different strategies might help you on your credit journey.

Sign up for ScoreGenius here.

Pay all of your bills on time

Your payment history is the most important factor in your credit score. Paying your bills on time – even if you can only make the minimum monthly payments – can help improve your score and prove to lenders that you’re a reliable borrower.

Reduce your account balances

The second biggest factor in your credit score is your credit utilization ratio – how much credit you’re using vs your total credit limits. The lower your account balances, the better your credit utilization ratio is.

If you lack credit history, open a secured credit card

To open a secured credit card, you’ll need to make a deposit to the creditor, usually $200 – $400. Then that amount becomes your maximum credit line. Once you open the card, you treat it like a regular credit card. Make charges on it, then pay the balance down each month.

Your purchase and payment activity on the secured card will get reported to the credit bureaus, and that activity can help you improve your credit score. Eventually, you may receive an offer to upgrade to a standard credit card account and you may even get your deposit returned to you.

Learn more: How To Get a Good Credit Score and Why It Matters

How to improve your credit to buy a house FAQs

How can I improve my credit fast to buy a house?

Talk to your lender. They may be able to give you tips on what accounts to pay off in order to increase your score quickly. Typically, it takes 30-45 days for new activity to show up on your credit report. Some lenders may have ways of speeding up that process when needed.

Can a 500 credit score buy a house?

You may qualify for an FHA loan with a credit score of 500. However, the FHA requires that borrowers with scores of 500-579 make a down payment of at least 10%.

What does my credit score need to be to buy a house?

Credit score requirements vary based on the type of loan you’re using:

Conventional: 620
USDA: 640
VA: 580
FHA: 580

Note, however, that the USDA and VA give lenders discretion to approve borrowers with lower credit scores who are otherwise qualified for a home loan.

The bottom line: You can improve your credit to buy a house

Just because you’ve had credit challenges in the past doesn’t mean you can’t buy a home or that you have to settle for a home you don’t want. Working with your mortgage lender can help you get your credit on track and achieve a score that qualifies for a great home.

Key Takeaways:

  • Even if you’ve struggled with credit, you can buy a house
  • The right lender can help you improve your credit score
  • Buying a house may be closer within reach than you think

Fairway is not a registered or licensed credit repair organization.

Further Reading

Fairway Advantage Pre-Approval is the Key to a New Home

$15k First-time Homebuyer Tax Credit 2021: All Your Questions Answered