How Do You Build Credit to Get a Home Loan?

1. Start by obtaining your free credit report from www.annualcreditreport.com. Review the report to see that all information is correct.

2. Open up a checking and/or savings account at your local credit union or bank. Show responsible usage of your bank accounts (i.e., no overdrafts).

3. Pay your current bills (i.e., utilities, rent, auto insurance) on time.

4. Apply for a credit card at the credit union or bank where you have your checking and/or savings account. You may be able to qualify for a secured credit card with a low limit. A secured credit card means you have given the credit union or bank the money to hold for the amount of credit extended to you.

5. Once you have shown responsible usage and payment on your credit card, apply for a mixture of other credit (i.e., small installment loan, gasoline credit card).

At least three open credit accounts with a 12-month good payment history on a mixture of credit types is what you need to start your qualifying for a home loan.