Buying a home in Connecticut is an exciting goal, but before you start touring homes, it is important to understand where your credit stands. Your credit history and credit score can affect whether you qualify for a mortgage, the loan programs available to you, and the interest rate you may be offered.

If your credit isn't where you would like it to be, don't assume that homeownership is out of reach. There are steps you can take to improve your credit and put yourself in a stronger position to apply for a mortgage.

1. Check Your Credit Reports

Your first step should be finding out exactly what is on your credit reports.

Review your reports from the three major credit reporting companies—Equifax, Experian, and TransUnion. Look for:

• Accounts you don't recognize

• Incorrect balances

• Late payments that were reported incorrectly

• Accounts that should have been closed

• Duplicate accounts

• Incorrect personal information

• Collections or other negative information that may not belong to you

If you find inaccurate information, you can dispute it with the credit reporting company and the company that provided the information. Correcting an error could improve your credit profile.

2. Pay Every Bill on Time

Payment history is an important part of your credit profile. If you have missed payments in the past, focus on getting current and then staying current.

Set up automatic payments or calendar reminders so you don't accidentally miss a due date.

Even if you can't pay a credit card balance in full, making at least the required minimum payment on time is important. Consistently making on-time payments can help establish a stronger payment history over time.

3. Pay Down Credit Card Balances

The amount of available credit you are currently using can affect your credit score. If your credit cards are close to their limits, paying down those balances may help improve your credit profile.

For example, if you have a $10,000 total credit limit and owe $8,000, you are using a large percentage of your available credit.

Before applying for a mortgage, consider making a plan to reduce high credit card balances while continuing to make every payment on time.

Tip: Don't drain your savings to pay off debt without first considering your overall homebuying budget. You'll also need money for your down payment, closing costs, moving expenses and potential home repairs.

4. Avoid Opening New Credit Accounts

If you're preparing to buy a home, this may not be the best time to open several new credit cards or take out new loans.

New credit applications can result in inquiries on your credit report, and opening new accounts can affect your credit profile. The CFPB recommends avoiding new credit unless you actually need it when you're preparing to purchase a home.

That means thinking twice before financing a new car, opening a store credit card or making a large purchase on credit shortly before applying for a mortgage.

5. Be Careful About Closing Older Credit Cards

It may seem logical to close credit cards you aren't using, but closing an account isn't always beneficial when you're trying to improve your credit.

An older account can contribute to the length of your credit history, and closing an account can also affect the amount of credit available to you.

If a card has no annual fee and is otherwise manageable, talk with a financial professional before closing it simply because you don't use it.

6. Deal With Past-Due Accounts and Collections

If you have past-due accounts, collections or other negative credit history, don't ignore them.

Start by understanding exactly what you owe and which accounts are being reported. Depending on your situation, you may be able to work with creditors or a qualified credit counselor to develop a plan for addressing outstanding debts.

Keep in mind that there are no legitimate shortcuts that can instantly "fix" accurate negative information on your credit report. Be cautious of companies promising dramatic credit-score improvements for an upfront fee.

7. Don't Take on Major New Debt Before Closing

Improving your credit isn't just about getting approved for a mortgage. Once you're preapproved, you still need to protect your financial situation throughout the homebuying process.

Avoid making major purchases or taking out new loans without first talking with your mortgage professional.

A new car loan, large credit card purchase or additional debt could change your financial picture and potentially affect your mortgage qualification.

8. Give Yourself Time

One of the biggest mistakes prospective buyers make is waiting until they are ready to buy a home before checking their credit.

If you know you want to purchase a Connecticut home in the next 6–12 months, start working on your credit now.

The longer you have to establish a history of on-time payments and reduce outstanding debt, the more opportunity you may have to strengthen your financial profile.

A Simple Credit Improvement Timeline

12 months before buying:
Check your credit reports, identify problems and create a debt-reduction plan.

6–9 months before buying:
Focus on making every payment on time and reducing credit card balances.

3–6 months before buying:
Avoid unnecessary new credit and large purchases. Speak with a mortgage professional about your options.

When you're ready to buy:
Get preapproved and discuss available mortgage programs based on your complete financial picture.

What Credit Score Do You Need to Buy a Home in Connecticut?

There isn't one universal credit score that guarantees mortgage approval. Requirements can vary based on the lender, loan program, down payment, debt, income and other factors.

For example, FHA-insured loans generally allow lower credit scores than many conventional loans, although individual lenders may have their own requirements. FHA loans can also allow down payments as low as 3.5% for qualifying borrowers.

Your credit score is only one part of the mortgage approval process. Lenders may also consider your income, employment, existing debt, assets, savings and overall credit history.

Consider Talking With a Housing Counselor

If you're not sure where to begin, a HUD-approved housing counselor can help you understand your credit situation and develop a plan for preparing to purchase a home.

A housing counselor can be particularly helpful if you have experienced bankruptcy, foreclosure, collections, significant debt or other credit challenges.

Don't Let a Less-Than-Perfect Credit Score Stop You From Planning

If buying a Connecticut home is your goal, improving your credit can be an important part of getting financially ready.

Start by checking your credit reports, correcting inaccurate information, paying bills on time, reducing credit card debt and avoiding unnecessary new debt. Then speak with a qualified mortgage professional about your specific situation and the loan programs that may be available to you.

The earlier you start, the more time you have to improve your financial position before you're ready to make an offer on a Connecticut home. 🏠