How Much Credit History Is Needed to Buy a House?

Generally speaking, mortgage lenders look for an established credit history in home buyers. For some lenders this is as little as one year of on-time credit payments, and no delinquencies on your credit report in the last 2 years. 

Remember that each lender is different, so requirements vary. Some lenders may not want to see any delinquencies in the past 4 years, and a solid payment history for the past 2 years.

Making sure that lenders will extend the amount you need is crucial. So, what kind of credit history do lenders like to see? Most lenders offering mortgages look for: 

• 100% on-time payments. No lender wants to see defaulted payments. This reduces their confidence that you will be able to pay back your mortgage on time. Make sure your credit history reflects on-time payment activity before you apply for a mortgage. 
• Low debt levels. If you’re taking on too much debt and overutilizing available credit, this makes lenders nervous. Maintain low credit utilization and show that you can take on a mortgage. Otherwise, you can overextend yourself and fall into greater debt fast. 
• A good credit mix. You’re currently balancing credit card debt, auto loans, and other lines of credit. This indicates that you’re more than able to budget and pay back loans in a timely manner. 

Simply put, the better your credit history and score, the better borrower you appear to be. 

How Much Time Does It Take to Establish a Good Credit History?

Working on your credit over time is a good idea regardless of whether you’re shopping for a house. 

But those specifically in the market for a home may ask, how much time does it take to establish a good credit history? 

The reality is that every lender is different. How far they look back at your history will depend on their own assessment process. The longer your good credit history, the greater your chances of success. 

While you are working on your credit history, you are likely renting, also check out our article on how credit can affect rent and vice versa: “Do You Need Credit to Rent an Apartment?“.

Two years of on-time payments is typically the baseline for how much good credit history you should have. Most lenders will accept two years of stellar credit history when considering you for a mortgage. If you don’t have this, then see if you can wait a bit longer to build on your current history. 

Things That Mortgage Lenders Look for in Your Credit Report

There are a couple of things that mortgage lenders specifically look for when you apply for a mortgage. Avoiding these can put you in a better position when you’re ready to buy a home. 

Additionally, knowing that lenders might not accept you can help you look for alternative loan sources. 

Lenders are looking for: 

• Late payments. As we discussed above, no lender wants to see late payments. These will greatly impact your ability to secure loans with more desirable terms. 
• Eviction. Evictions indicate an inability to successfully pay back rent. They stay on you