Most people Googling “how to buy a home” soon find out that credit score plays a big role in getting a mortgage.

Your credit score shows lenders how to rate you as a borrower. Lenders want evidence that you pay bills and repay loans. A history of using credit plus a good credit score give a lender reassurance that you’ll repay the large sum of money they’re handing you.

Good Credit Gets You Started

Before house hunting, there are steps you can take to fix your credit, like paying down or paying off debt. You’ll also want to pull your credit reports to look for incorrect information that may be dragging your score down. Cleaning up credit gives you the opportunity to present yourself to a lender as a solid borrower.

Better Credit Can Mean Better Loan Terms

A good credit score helps you qualify for a mortgage with the best loan terms. Here’s why.

Because good credit scores tell mortgage lenders that you’re a safe bet to repay a loan, they may reward you for reducing their risk. A credit score above 720 is considered excellent and gets you the best home loan rates, according to the online financial site NerdWallet. NerdWallet says that the lending industry, in general, adjusts the interest rates that they offer based on credit score. On a conventional mortgage, the higher your credit score the lower the interest rate will be. The lower your credit score, the higher your interest rate, which could cost you a lot of money over the life of the loan.

Borrower-required credit scores vary with the type of mortgage. A government-insured FHA loan, for example, has lower credit score and down payment requirements than conventional loans. VA loans also offer terms that may have lower credit score benchmarks since many members of the military won’t need or get credit until they leave the service. If you’re a first-time homebuyer looking for a mortgage program that will make home ownership possible, it pays (literally) to shop around.

One Road to Better Credit

If you’re seriously thinking of home ownership, but need to improve your financial profile first, a good way to build credit is with a secured credit card. Secured cards like the OpenSky® Secured Visa® Credit Card are powerful credit-building tools. You make a security deposit to the card company equal to the amount of your line of credit. Then you can charge purchases to the card like any regular credit card.

Credit cards like the OpenSky card report to the major credit bureaus each month. The work you put into building good credit – using the card for purchases regularly, paying down or paying off your balance each month, on time – can pay off with a greatly improved credit score, even as quickly as six months.

Prepping Your Finances First Is Worth It!

Higher interest rates of even a fraction of a percent can cost you a lot more in home loan payments over the long term. Preparing your finances for homeownership by improving your credit score is a worthy goal to go after!