Surprise! This One Thing Can Boost Your Credit Score Before Buying a Home

Credit scores are a key factor in whether you're approved for a home loan and what mortgage rate you receive. So it's not surprising that many people looking to buy a home want to boost their score before they apply for a mortgage.

But what's the most effective way to increase your credit score in a short amount of time? One way to do it is to pay off some of your current debt, like a credit card, to show lenders you're not maxing out your credit utilization.

Here's how paying off some debt increases your score and one bonus tip that can potentially raise your score in minutes.

Pay off some of your debt

Your credit score is determined by a handful of factors. Some of them you may not have immediate control over (like how long your credit history is), but the most important ones are, generally, within your control.

Here are the top factors and the weight given to each to determine your FICO® Score (the one most commonly used by lenders):

• Payment history: 35%
• Amounts owed: 30%
• Length of credit history: 15%
• Credit mix: 10%
• New credit: 10%

While payment history is technically the most important factor, let's focus on "amounts owed" because this might have the most immediate impact.

Lenders typically want you to see a credit utilization ratio of no more than 30% of your available credit. For example, if you have three credit cards with a total line of credit of $25,000, lenders want to see a total balance of less than $7,500.

Remember, 30% is the high end, so the lower your credit utilization, the better. Lowering your credit utilization by paying off a credit card could quickly improve your credit score. Research shows that paying off your credit card could increase your score by 10 to 50 points.

How to do it: Focus on your debt with the lowest balance, like a personal loan or a credit card. Comb through your monthly budget and pare back any extra spending that could go toward the debt. Consider growing your income to help you reach your goal, such as by taking on a side hustle or working as a freelancer. The goal is to push your credit utilization as low as you can, and definitely below 30% if possible.

One bonus way to boost your score

Experian offers a free online tool for connecting some of your billing accounts to your credit profile, which can potentially increase your score.

It's called Experian Boost, and it works by looking at two years of qualifying bills (like rent, utilities, streaming services, insurance payments, internet service bills, etc.) to see which ones you've paid on time. If you have a good history of on-time payments, your score could go up. Experian says that when scores increase, the average jump is 13 points.

I recently signed up for Experian Boost, connecting four of my bills to my credit file, and my score increased by 28 points.

It's worth mentioning that your credit score could potentially decrease as a result of trying this, but Experian says if that happens, you can disconnect your bill information from Experian Boost, and your score should go back up.

While there's no guaranteed way of boosting your credit score before buying a home, paying down your debt and trying the Experian Boost tool are two excellent options.

Lowering your credit utilization will show mortgage lenders that you're responsible with the credit you already have. And linking some of your past billing information to your credit file through Experian Boost can potentially show lenders all of the on-time payments you've made.