How to Fix Bad Credit to Buy a House

Fixing or improving a credit score is practical for multiple reasons. For starters, mortgage lenders are more apt to approve applicants with an impeccable credit history. Not only does good credit help you acquire credit, but the higher your score, the better your interest rate on a home loan. Thus, it's wise to stay on top of your score and do everything within your power to improve your score before buying a house.

Step 1

Refrain from defaulting on credit card bills and loans. Sending a late payment or opting to skip a payment altogether can have a negative impact on your credit score and your ability to acquire credit. Pay your bills on time consistently to help fix bad credit.

Step 2

Strive to eliminate debt. Excessive credit card use and paying only the minimum payment doesn't help your credit score. Aim to lower or pay off your credit card debts, and then pay off new debts at the end of each month.

Step 3

Communicate with creditors. Rather than default and cease communication with creditors, keep them aware of your situation and ask for a modified payment arrangement. Defaulting often results in collection accounts and judgments, which can stay on your report for seven years.

Step 4

Open a new credit account following a bankruptcy. Bankruptcies are detrimental to credit ratings. Take immediate action after your discharge and apply for a secured credit card with your bank to begin re-establishing your credit history.

Step 5

Limit inquiries. Repeatedly submitting applications for new credit cards and loans can remove points from your score. To restore credit and qualify for a mortgage, stop applying for new credit.

Step 6

Look for mistakes. Check your report annually for inconsistencies or mistakes, such as unfamiliar accounts, that can produce a lower score. Get reports from annualcreditreport.com.