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As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.

There’s a common trope where in school, if you did something against the rules, you were told that it would go on your permanent record and would prevent you from succeeding in college and beyond.

While we can’t speak to whether or not a third-grade food fight will keep you from studying biochemistry at Harvard, we can tell you that every move you make with your credit history is tracked. It all goes down on your credit report.

If you’ve got negative information on your credit profile, it’s going to stay on your report for seven years (10 years for a Chapter 7 bankruptcy). This may be particularly troublesome if you’re looking to get a new car or a house. The good news is the older the negative items are, the less they’ll affect your score.

Developing good habits can boost your credit score, which in turn can show lenders you’ll be a good credit risk going forward.

FICO and Your Mortgage

Having good credit means better interest rates because you’ve shown lenders and investors that you’re a responsible borrower. The main way the average person gets a glimpse into the state of their credit is through their FICO score.

To get a mortgage, the minimum score for FHA loans is 580, while conventional loans require a 620. There is no specific minimum for VA loans, but individual lenders may have their own criteria. Quicken Loans requires a 620. In general, the higher your score, the more options you’re going to have when it comes to your mortgage.

A number of factors play into your credit score. These include the credit mix, your payment history (including existing debts) and how much credit you utilize.

Check Your Credit Report

Much like maintaining your car with inspections and tune-ups, you should try to check your credit report on a regular basis. This is particularly important if you’ve found your score is lower than you’d like.

It’s important to know the details of your score because not only does it help you identify any credit problems you have, but it also makes you aware of any inaccuracies that may be present on your report. In a 2012 study by the Federal Trade Commission, it was found that one in five consumers had an error on their report that had to be corrected by a credit reporting agency.

You can get your credit report for free through QLCredit.

If you do find something on your credit report that doesn’t look right, you can file a dispute with the individual credit bureaus.

Deal with Debts and Collections

The best thing you can do to boost your score is to pay off debts and collections. Creditors would rather have some money than no money, so if you can either work out with the creditor an amount you can afford or get on a repayment plan, it can really help.

If you can’t find a way to make the payment in full, you can try to strike a deal with the creditor to make at least part of the payment. If you do this, it will show up as “paid as agreed” on your credit report. This isn’t as good as “paid in full,” but it does help. If you must cut this type of deal, make sure it’s worth it for you. Don’t pay as agreed if you’re able to make the full payment in the near future. It will hurt your credit.

Paying off debt will also help with your debt-to-income ratio (DTI), which will help when you’re getting a mortgage. Keeping your DTI as low as possible enhances your chances for mortgage approval because it shows your lender you don’t have too many debt payments that could take precedence over paying your mortgage every month.

It’s important to pay off collections in order to get a mortgage. However, in paying it off, it may restart the clock so that the collection appears more recent than it actually is, hurting your score. We recommend that when clients pay off their collection, they ask the creditor to delete or remove the collection from the report. This way, the collection is paid off and it helps your score.

Credit Utilization

When you apply for a mortgage, it’s a good guideline to keep your credit utilization at no more than 30%. For example, let’s say you had a credit limit of $1,000 on a particular card. You would want to put no more than $300 at any given time on that particular card.

If you can’t make that work, higher utilization may be all right as long as you pay off the full balance (or a substantial portion) every month.

Asking the banks to increase your credit limit can help your utilization percentage. That way, you can spend the same amount you normally would, but you’ll be utilizing less of the credit you have available to you. Creditors won’t necessarily do this if you have a checkered credit history, so it might be best to show you can regularly pay the balance and pay off any debts and collections first.

Broaden Your Credit Horizons

It’s beneficial to have a few different types of loans and lines of credit on your credit report. Typical ones include a car loan, a personal loan for home repairs or something similar, and a couple of credit cards.

If credit bureaus see you have a mix of loans you’re paying toward every month, you show a history of being a responsible borrower. When you apply for a mortgage, the lender will check to see that you consistently make your payments.

You don’t necessarily want to take out loans you don’t need and build debt just for credit’s sake, but having the loan variety is something to keep in mind as you build your score.

New to Credit?

If you’re new to credit, you’re going to need to build it up a little bit before applying for a mortgage. Fortunately, there are a couple ways to do this without it taking years.

To start off your credit history, you’ll probably have to start with a secured credit card. With a secured card, your credit limit is secured by a deposit of your own money. If you put $1,000 down as a deposit, your credit line would then be $1,000. As you pay off your balance every month, you’ll start to build a credit history.

After several months of paying off your balance on time, you might be able to get other unsecured cards and other types of loans.

Another way to quickly build credit is to become an authorized user on someone else’s credit card account. This can be a good option for spouses and family members. If the payments are already being made (and you might be contributing to them), this can give your credit a boost.

Think you’ve worked on your credit enough to get into the house you’ve always dreamed of? Talk to one of our licensed Home Loan Experts today by filling out this form or calling (888) 728-4702. You can also check out QLCredit. A member of the Quicken Loans Family of Companies, QLCredit is committed to providing you with the best streamlined, easy-to-use platform for you to monitor your financial health and credit strength.

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This Post Has 63 Comments

  1. My husband and I would like to move from our condo into a house. He has been working on his credit and I believe it is about 670. My credit score is over 800. While I always pay my bills on time, I don’t have much in savings other than 401k. We do have a bit of equity built up in our condo, maybe about $15k. I’d really like to have more money to put down on a house, but I feel like they are just going to keep increasing in price. We’d like to move in the next year anyway to be closer to work and have a yard for our pets. We would also then be saving $155/month due to no more HOA fees. Do you advise it not smart to be looking at houses without much of a savings or do you think I could make this work, especially with the money I’d be saving on the HOA?

    1. Hi Gabrielle:

      Whether you’re in the best position right now is more of a question for one of our Home Loan Experts who can talk to you and get a much deeper picture of your financial situation. In the market most of the country is in right now, it certainly couldn’t hurt to go over your options before prices go up rather than trying to time the market. It’s not going to hurt to have a chat with us. You can get in touch by filling out this form or calling (888) 980-6716 at your convenience.

      Thanks,
      Kevin Graham

  2. I have a defaulted Chase student loan from about 6 years ago. It is reporting derogatory on my credit with a $0 balance and original balance $12k but its not included in my total debt on my report. I want to know how might it effect with getting a mortgage in the year or so. Should I plan to pay the debt off or wait until it drops off my credit report, if it does?

    1. Hi Keida:

      I’m going to recommend you speak with one of our Home Loan Experts. They would be able to give you better advice than I can in this instance. We do have credit experts who should be able to give you guidance. You can get in touch with them by filling out this form or calling (888) 980-6716.

  3. I was told that my dti would stop me from getting a loan bc I owe 60k in student loans, currently its in good standing bc its in ibm with a 0 payment… He said that it would still count as 1%, is there any way around this? Could I try to get a low payment instead of paying 0?

    1. Hi Cc:

      Unfortunately, you can’t qualify for a mortgage with a $0 payment on your student loans, because the lender has to take into account the fact that you will be paying them back at some point. Currently, in most cases, the rules are either that you have to use the payment reporting on credit or 1% of the loan amount. The exact guideline varies depending on what type of loan you apply for. If nothing shows up on the credit report, it’s 1% of the outstanding balance. I hope this at least helps you know where you stand.

      Thanks,
      Kevin Graham

  4. I have in the neighborhood of $20,000 credit card debt with about 27 % utilization. Starting to pay off in chunks after my divorce but have a score in the 730-760 range….debt to income is in the 20% range…..Can you get a loan with high credit card debt?

    1. Hi Ken:

      While that is a fair amount of credit card debt, your utilization is pretty good, your credit score is high, and your DTI is low. We can certainly look into your options. I’m going to recommend you call (888) 980-6716 and one of our home loan experts will be happy to talk to you.

      Thanks,
      Kevin

    1. Hi Donna:

      In many areas of the country, that would be considered a jumbo loan. If that’s the case, the minimum down payment is 15% unless you qualify for a VA loan. In high-cost areas, this may be a conforming loan that you can get through Fannie Mae, Freddie Mac or the FHA. If that’s the case, you may be able to make a down payment as low as 1% or 3%. I’m going to recommend you speak with one of our Home Loan Experts by calling (888) 980-6716.

      Thanks,
      Kevin Graham

  5. I have seen some houses that are for closure in my area which I am interested in buying .I have no money for down payment .
    What do I need to do ?

    1. Hi James:

      The first thing to do is save a little bit of money for a down payment. The only loan option we offer without at least some kind of down payment right now is the VA loan. However, if you have a 680 credit score and low-to-moderate income, we do have a program where you can get a primary home for as little as 1% down. We also have 3% and 3.5% down payment options depending on your qualifications. The best thing to do would be to get in touch with one of our Home Loan Experts by calling (888) 980-6716. Good luck!

      Thanks,
      Kevin Graham

  6. I have a mortgage on my home with quicken loans. I purchased an acre in a nearby town where I would like to retire eventually. I would like to build a home. I am presently putting services in place and interviewing builders. The acre is paid for, i have full title. I would be selling my present home and the new home would be my main home. Does quicken loans finance a home to be built? Also I would like to stay in my home and not sell until the end of the summer. Would they finance a new home being built while I am living in the other? The reason I ask is that it is much cheaper to live in my home than to rent an apartment or house. Thank you for your time, Susan

    1. Hi Susan:

      Thank you for choosing us for your mortgage! Unfortunately, new homes have to be finished before we can help you with a mortgage. I’m very sorry we can’t help you with this particular project.

      Thanks,
      Kevin Graham

  7. So, when my son unexpectedly passed away I went through a time where I wasn’t current with bills. I had 4 in collection. I made agreement with the companies and settled bills. I have 12 revolving accounts and have paid them below 35%. After that my scores dropped from 577 to 542. No one can tell me why this has happened. I also pd off a loan at my bank for 1500 and my car for 4700. This hasn’t hit the credit bureaus yet. What in the world am I doing wrong?

    1. Hi Terri:

      I’m sorry to hear about your son’s passing. You have my sympathy.

      There are two ways you can pay off accounts. You either pay in full or work out an agreement with them and it shows as “paid as agreed.” Paying as agreed is better than paying nothing at all, but it’s not as good as payment in full. Based on the scenario you’ve outlined, that’s the only thing I can think of.

      We do have a service in QLCredit. You’re able to pull your credit for free without affecting your score and get personalized tips on how you can improve. It might help give you some strategies to push your score back up.

      Thanks,
      Kevin Graham

  8. I have been with one employer for the last 2 and a half years… I just recently accepted a new job offer with much better pay.. How long should I wait to be with the new employer before applying for a mortgage loan?

      1. Hi Cindy:

        It’s hard to give you a specific guideline because every situation is different. Sometimes we can do it over a shorter timeframe than others. In general, the longer you’re employed, the easier it is to get approved. However, if the job is in the same field with higher pay, sometimes that’s a mitigating factor. You should really talk to one of our Home Loan Experts. You can get in touch with them by filling out this form or calling (888) 980-6716.

        Thanks,
        Kevin Graham

  9. Hi,
    My credit score is 590, 618, 690. I am battling between the usage and age on my report.
    My credit report shows a 12000 closed credit card account 15000 limit. Underwriter said I can’t get home financing until I pay half on the closed credit card; on the other hand, the bank said don’t pay half off because it won’t make any difference right now its better to keep making payments because I don’t have any age/history so a secured card was suggested of 250 and I have it my usage is up and down . The 2 credit card is the only balance along with a car finance balance 18000. All payments are current but what I need to know who is telling the truth the Underwriter or my bank.

    1. Paying it down will help with your debt to income ratio which is what the underwriter is looking at. Having a lower debt to income ratio would help you get approved. You don’t have to get that down to the point where you pay the whole thing off, especially if you’re not ready. However, paying off a big part of that would certainly help with getting home financing. If you want more in-depth advice on your particular situation, one of our Home Loan Experts would be happy to talk to you if you give them a call at (888) 980-6716.

      Thanks,
      Kevin Graham

  10. I have 7 months left of my 5 year chapter 13 payment plan.

    Do you recommend I wait until my payment plan is complete or start the process now?

    My lease is up the same month as my last trustee payment so I would like to be ready to go at that time.

    1. Hi SB:

      For chapter 13 bankruptcy, it must be discharged or dismissed for at least a year prior to a new mortgage application. With that being said, one of our Home Loan Experts can certainly help you go over your options for the future if you call (888) 980-6716.

      Thanks,
      Kevin Graham

  11. Hello. I have my VA Loan available and have been discharged from a Ch 13 for 1 year which was a 5 year pay plan of $1600 per month. Finished on time no missed payments. Currently I make $120k per year. Any chance of a home loan this summer. Most banks say I have to wait at least 2-3 years.

    1. Hi Dale:

      If it was a chapter 13 bankruptcy with a VA loan, we can start looking into your options. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 980-6716. Have a great night!

      Thanks,
      Kevin Graham

    1. Hi Jasmine:

      While we don’t have a specific minimum loan amount, when the loan amount starts getting that low, it pays to make sure that the closing costs and fees make sense for you. I’m going to recommend you talk to one of our Home Loan Experts to see if this would fit your situation. You can get in contact with them by filling out this form or calling (888) 980-6716. One alternative you might take a look at is a personal loan. These are available through our sister company Rocket Loans. They can make a lot of sense when you start getting into lower loan amounts. Hope this helps!

      Thanks,
      Kevin Graham

  12. Is there anything to prove a house was included in a bankruptcy that the bank took 3yr to finish forecloser and only then after courts threatened to dismiss case. Here I sit credit repaired, large down payment and a foreclosure that looks like it happened last year.

    1. With the bankruptcy and foreclosure, things definitely get a little complicated and we may or may not have an option for you, but if you give us a call at (888) 980-6716, we can look at everything and do our best to find something that works for you.

      Thanks,
      Kevin Graham

  13. My fiancé and I are both Veterans and will be utilizing the VA Loan. Our credit is up to par but we both have accumulated student loan debt of around $65k a piece. Our loans are in good standing but we were wondering how amount of the loans would affect our chances of buying a home?

    1. Hi Charlene:

      When it comes to credit, every situation is different. It’s going to come down to what your monthly payment is on those loans and how that factors into your debt-to-income (DTI) ratio. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 980-6716.

      Thanks,
      Kevin Graham

    1. Hey Jennifer:

      It looks like someone is attempting to reach out to you. His name is Jay Saad. If you haven’t made contact in the next day or so, please let me know.

      Thanks,
      Kevin Graham

    2. Asking for advice ,resources? Bone cancer, stem cells trancplant soon, found black mold though trailer, credit poor due past payed medica Bill lost everything, working on fixing couple bills receive 14,75.00 mnth @ 17,700.00 yr, credit score only 554 does anybody know who to contact?

      1. Hi Joseph:

        Your credit score is a bit low for us to be able to help you with any sort of mortgage right now. It might be beneficial to have a chat with one of our Home Loan Experts at (888) 980-6716. They would be able to offer you advice.

    1. Hi Wes:

      We do require your Social Security number because we eventually have to run your credit in order to determine what kind of rate and loan programs you might qualify for. It also helps us confirm your identity. I hope this helps!

      Thanks,
      Kevin Graham

    1. Hi Francisco:

      There are some low down payment programs. There are also assistance grants available through the Department of Housing and Urban Development. I think your biggest priority is probably going to be finding a house that fits into your budget. I’m going to recommend you talk to one of our Home Loan Experts to go over your individual situation. You can do that by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

  14. Hi Kevin I rcvd in the mail a prequalified letter stating that I am already prequalified for a mortgage however I haven’t completed any inquiries with QL, should I be concerned that my info has been shared or what do you suggest I do? And yes I am currently in the market for a home!!!

    1. Hi Kishon:

      I’m definitely going to pass this along to someone to check in the best for you. However, I wouldn’t necessarily be worried that your info has been shared. When you get in the market for any big purchase, other lenders find your info through public records and credit bureau inquiries. That’s probably what happened here. I don’t think you have to worry about identity theft or anything. That said, I’m going to have someone reach out and check into this. If you’re in the market, feel free to give us a look as well. We pride ourselves on making the mortgage process as smooth as possible and we have ranked highest in customer satisfaction for primary mortgage origination the last seven years according to J.D. Power. We ranked highest for mortgage servicing the last three years. But before worrying about that, I’m going to have someone check this out for you.

      Thanks,
      Kevin Graham

  15. Which credit reporting agency does Quicken Loans use? The reason I am asking is because I just did the free report and I got three different scores. Experian – 756, Equifax- 723 and Transunion – 686. Why are they different? I am thinking about buying the home that we are currently renting, however I am not ready yet, still saving for the down payment, I just want to be prepared when we are ready to buy.
    Thanks,
    Lorrie

    1. We use the lowest middle credit score of all borrowers on the loan. This means that if you and your significant other were to apply together and we pulled a report from all three credit bureaus and you had middle scores of 700 and 680, 680 would be the score we would use for qualification. As to why the scores are different, sometimes the credit report has slightly different information and the formulas are different as well. Hope this helps! Thanks!

      Kevin Graham

  16. After one hour of filling in data for my “free” credit score with Quicken, or Rocket, or whatever their name is this week, I got no score. None, nada, Zip, BUT, for just $19.95 a month I can get that too. I am a licensed Texas Real Estate Broker licensed for 35 years. While there are honest professionals out there, they are getting harder and harder to find, no matter how many loans Quicken has shoved people into, they are still dishonest hucksters. Hey, thanks for wasting MY valuable time Rocket, Quicken, or whatever the name de Jour is this week.

  17. I have a current Fico score of 581, what are the requirements other than a 580 score or above is needed to get a loan? Please be specific.

    1. Hi Tiffany:

      Unfortunately, it’s not possible to be specific to every situation in an article like this. What I can tell you is that some programs have different requirements in terms of debt-to-income ratio and other factors based on your credit score. I’m going to have someone reach out to you to go over your situation in much greater depth, but there are many factors that affect loan approval.

      Thanks,
      Kevin Graham

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