prequalificationWhen you’re buying a home, you’ll find yourself overwhelmed with numbers. Interest rates, sale prices and down payment percentages, just to name a few. But I think the most important number you need to focus on is your credit score.

The three-digit number that represents your credit score has a big impact on how much you can save buying a home. The higher the score, the lower the interest rate you’ll pay for the money you borrow.

It will also help you secure a conventional loan over an FHA-insured loan. The difference between the loans is that with an FHA loan you will pay mortgage insurance on the loan, usually for the life of the loan. FHA mortgage insurance is also typically higher than what you pay for conventional loans.

A higher credit rating will also equal lower mortgage insurance, which can save you money over a long period of time.

Here’s my advice if you’re trying to boost your credit score:

  • Keep credit card balances as low as possible.
  • Pay your bills on time.
  • Keep your credit card accounts open.
  • If you don’t have a credit card – apply for one and start establishing your credit history.

If you have any collections, talk to someone like myself before paying them off. It could actually hurt your score because of the way it gets reported to credit agencies.

I advise people working on improving their credit score to try to shoot for a 620 to 640. But obviously, the higher the better.

It usually takes a couple months to improve your credit score, which is why it’s important to stay on top of your credit rating, and get your credit checked before you start looking for a home.