How to Improve Your Credit Score Before Buying a Manufactured Home
If you’re thinking about buying a manufactured home but you’re worried your credit score may hold you back, you’re not alone.
Credit is one of the first things lenders look at when reviewing a loan application, but a less-than-perfect credit score doesn’t necessarily mean homeownership is off the table. And even a relatively small improvement in your credit profile may help give you more financing options or better loan terms. The key is knowing what to work on — and starting before you’re ready to buy.
First: Why Does Your Credit Score Matter?
Your credit score gives lenders an indication of how you’ve handled borrowed money in the past. In general, a higher score can make it easier to qualify for financing and may help you receive a better interest rate.
But your credit score is only part of the picture. Lenders will also consider your income, existing monthly debt, employment history, down payment, assets and your overall credit history.
Manufactured-home financing also isn't one-size-fits-all. Financing a home located in a land-lease community, for example, is different from obtaining a traditional mortgage on a home and the land underneath it. Loan requirements can vary significantly from lender to lender. So instead of assuming you won't qualify because of a number you see on a credit app, it can be worthwhile to understand your entire financial picture.
1. Start by Reviewing Your Credit Reports
Before trying to improve your credit, find out exactly what is being reported.
You can obtain your credit reports from Equifax, Experian and TransUnion through AnnualCreditReport.com.
Review all three reports carefully. Look for things such as:
Accounts that don't belong to you
Payments incorrectly reported as late
Balances or credit limits that are incorrect
Closed accounts showing as open
The same debt appearing more than once
Errors can negatively affect your credit. If you find something inaccurate, you have the right to dispute it with the credit bureau and the company that reported the information.
And don't worry: checking your own credit report does not hurt your credit score.
2. Pay Every Bill on Time
If you're trying to improve your credit, this should be priority number one.
Your payment history is one of the most important factors used in calculating credit scores. Late payments can hurt, while consistently paying bills on time helps establish a positive payment history.
If you've fallen behind on an account, focus first on getting current and then staying current.
A few simple tools can help:
Set bills to autopay
Set calendar reminders several days before due dates
Schedule minimum payments automatically and pay additional amounts separately when possible
Consistency matters.
3. Work on Paying Down Credit Card Balances
One of the areas that may offer the greatest opportunity for improvement is your credit utilization — essentially, how much of your available revolving credit you're currently using.
For example: If you have a credit card with a $5,000 limit and a $4,500 balance, you're using 90% of your available credit.
If that balance drops to $1,000, you're using only 20%.
Credit scoring models generally favor lower utilization. The Consumer Financial Protection Bureau notes that experts commonly recommend keeping balances below 30% of your total available credit, with some recommending even lower utilization.
If you're planning to apply for manufactured-home financing, paying down high credit-card balances may be a good place to focus your extra cash.
4. Don't Close Old Credit Cards Just Because You've Paid Them Off
Paying off a credit card can be great. Immediately closing it may not be.
Closing a card reduces the amount of available credit you have, which can cause your credit utilization percentage to rise. The length of your credit history can also play a role in credit scoring.
Unless there is a compelling reason to close an account — such as an expensive annual fee — keeping an older account open may sometimes be beneficial.
5. Avoid Opening New Accounts Before Applying for a Home Loan
That department-store credit card offering 20% off today's purchase might not be worth it if you're getting ready to buy a home.
When you apply for new credit, a lender may make a hard inquiry on your credit report. Opening several new accounts in a short period can also negatively affect your score.
If buying a manufactured home is one of your near-term goals, try to avoid unnecessarily applying for:
New credit cards
Auto loans
Furniture financing
Buy-now-pay-later accounts
Other consumer loans
Keeping your finances stable in the months leading up to a loan application can make the financing process much easier.
6. Don't Carry a Credit Card Balance Just to “Build Credit”
This is a common misconception. You do not need to carry a balance from month to month or pay interest in order to build good credit. Using a credit card responsibly and paying the balance on time can help establish a positive payment history without paying unnecessary interest.
7. Be Careful With Companies Promising a Quick Credit Fix
There is no legitimate overnight fix for bad credit.
Be cautious of companies promising to dramatically increase your score within days or claiming they can simply remove accurate negative information from your report.
Improving credit usually comes from relatively boring — but effective — habits:
Pay bills on time.
Reduce debt.
Keep balances low.
Avoid unnecessary new credit.
Correct legitimate errors.
Then give those changes time to appear in your credit history.
How Long Does It Take to Improve Your Credit?
There isn't one answer. Someone with high credit-card balances may see improvement after balances are paid down and the new amounts are reported. Someone rebuilding after missed payments may need months of consistent on-time payments before seeing meaningful improvement.
Older negative information also generally has less impact than more recent negative information. The important thing is to start early.
If you think you'd like to purchase a manufactured home six months from now, don't wait until you're standing inside the home you love to start thinking about your credit.
Start now. And when you are ready, check out our current inventory here.
What Credit Score Do You Need to Buy a Manufactured Home?
This is one of the most common questions we hear — and unfortunately, there isn't one universal number.
Manufactured-home loan requirements vary by lender and loan program. Your score may also affect your required down payment, interest rate and other loan terms.
Lenders may consider factors beyond the score itself, including:
Your income
Your debt-to-income ratio
Your down payment
Your recent payment history
Collections or charge-offs
The home you're purchasing
Whether the home is located on private land or in a manufactured-home community
That's why we encourage buyers not to automatically rule themselves out. Understanding the 5 Key Numbers Behind Manufactured Home Loan Approval
Thinking About Buying a Manufactured Home? Start the Conversation Early.
You don't have to wait until your credit is “perfect” to begin looking at your options.
At Galaxy Homes, we work with manufactured-home buyers throughout Southern California and can help you understand the financing process, what lenders may be looking for and what steps may help you become better prepared to purchase.
Sometimes the answer is, “You're ready now.”
Sometimes it's, “Let's work on a few things first.”
Either way, knowing where you stand gives you a plan.
Thinking about buying a manufactured home? Contact Galaxy Homes and let us help you understand your options. We have a full in house finance department that can help.
