Guest post, by Matt Lee

It has long been accepted that buying a home is a strong financial decision. Building equity in an asset that appreciates over time definitely beats letting rent burn a hole in your pocket. 

A multitude of factors has made the timing ripe for purchasing a home, including:

• Historically low mortgage interest rates for those with strong credit ratings 
• Innovative building materials, such as concrete roof shingles, that have greatly reduced the costs and maintenance associated with homeownership
• The increased prevalence of remote work that has allowed people to spend more time enjoying their homes

The allure and perks of buying a home in the current climate are manifold. There remains one small roadblock: qualifying for a mortgage. If you are ready to put a down payment on a house but cannot get approved for a sufficient loan due to credit concerns, consider some of the following pieces of advice on quick ways to build credit for a mortgage before the home you want flies off the market.

1. Pay Down All Existing Debt

If you are looking to quickly improve your credit score, one of the most effective steps you can take is to reduce all of your credit card balances as much as possible. 

Lenders look toward your debt-to-income ratio as part of their process for determining your credit worthiness. If they see a huge amount of outstanding credit card debt against an income that isn’t sufficient to make payments on an additional loan, then you are likely to face difficulty in getting approved for a mortgage.

It is generally a good idea to keep some cash on hand for a rainy day. It is generally a bad idea to cash out investments before they mature. But when it comes to quickly improving your credit score, it may be worth your while to go against the grain of conventional wisdom to improve your debt-to-income ratio.

2. Have Friends or Family with Very High Credit Scores Authorize You on Their Accounts

One of the reasons your credit score is too low to qualify for the mortgage rate you want, is that you do not have a long enough credit history. 35% of your credit score consists of on-time payments. Those with a short credit history get penalized for lack of track record. Your credit score will improve over time by consistently demonstrating prompt payment. But if you want to buy a home now, you do not have the luxury of letting your credit score build over time.

One trick is to get added as an authorized user on the credit accounts of friends and family members with strong credit scores. While you will not be actively using or making purchases on these accounts, credit rating agencies will see your name on accounts with a long history of on-time payments and factor that in when calculating your score.

3. Get a Rapid Re-Rescore from Your Lender if Errors are Present

If your credit score is coming back lower than anticipated, it may be possible that there is an error on your credit report. Meticulously scan your report and if you notice any errors or discrepancies. Then quickly inform all three credit rating bureaus to get the error resolved.

The process to get your consumer credit report updated can take some time. You may need to request a rapid re-score from your lender. A rapid re-score will not immediately change your credit score. When complete it will show your lender that a previous error is in the process of being corrected. It can help them see if your new estimated score is worthy of mortgage approval.

4. Make a Small Purchase on an Old Credit Card

Another factor that influences your credit score is the age of your credit. Credit is strengthened by the average age of accounts. So, if you have a 10-year-old credit card that has become inactive and it gets removed from your credit calculations, it will have a negative impact on your credit.

Iif you have an old credit card that you rarely use, and it has become inactive, go make a small purchase on it. Also contact your financial institution and let them know that it is an active account. This can provide an immediate boost to your credit score by maximizing the average age of your credit. Do not confuse this with re-opening a closed account. Re-opening a closed account will actually be negative for your credit. It will reflect a new account being opened as opposed to the continuation of a long-running account.

Tips to Avoid Hurting Your Credit Score Before Closing on a Mortgage

While the aforementioned points can effectively build your credit score in a matter of days (under the right circumstances), it is just as important not to damage your credit score when you are right on the fence of qualifying for a mortgage. If you are on the verge of closing, carefully consider the following pieces of advice to avoid your mortgage lender coming back with some unexpectedly bad news:

• Do not open new credit accounts or take out any other loans. The age of credit is one of the elements on which your credit score is calculated. Opening a new credit card or financing a vehicle while you are in the process of getting approved for a mortgage is a very bad idea
• Do not inquire or apply for new credit. Even if you do not actually open an account, applying for credit or getting your credit history checked can negatively impact your credit score. Wait until your mortgage is closed before submitting any other credit applications
• Avoid major purchases. As mentioned, debt-to-income ratio is a primary component of credit calculations. Financing a new flat screen while you are in the midst of the mortgage approval process can quickly lower your credit score

Conclusion | Quick Ways to Build Credit for a Mortgage

The timing has never been better to be a homeowner. Historically low-interest rates, cost-saving building materials, and the work-from-home culture are making getting in a home a top priority for many Americans.

If you are ready to make an offer on a house and are having trouble getting approved for a mortgage, there are a number of ways. Paying down all existing debt, getting authorized on friends and family members’ accounts, and having your lender do a rapid re-score once errors are corrected. These methods can quickly give your credit score a boost in the right direction. 

Eeven a fraction of a percentage in your mortgage interest rate can equate to tens of thousands of dollars over the life of the loan. Even if you get approved for a mortgage, it is a good idea to take these steps to get the most favorable rate possible.

Matt Lee is the owner of the Innovative Building Materials blog and a content writer for the building materials industry. He is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that save money, improve energy efficiency, and increase property value.