Key takeaway

Taking actions such as cutting unnecessary expenses or paying all your bills on time are ways to help improve your financial health, potentially making it more attainable for you to achieve your goal of buying a home.

Your savings, credit score, and the amount of debt you carry are key components of your financial health. Evaluating your current financial health may show you changes that may improve your ability to get a home loan and achieve your goal of homeownership. Here are some actions to consider.

Build your savings

Saving money is a key part of building your overall financial health, and it’s an important step in preparing to become a homeowner. Among other things, you may use savings for earnest money, a down payment, to pay for a home inspection or closing costs, or for sprucing up your new home after you buy. Some of the most effective ways to increase your savings:

  • Find additional sources of income. This can be a side job, overtime, or by selling some items you no longer need.
  • Cut unnecessary expenses. Put the money you would have spent into your savings.
  • Set up an automatic transfer. Put a portion of every paycheck (such as 5% or 10%) automatically into a savings account.

Reduce your debt

The money you owe on credit card bills, car loans, or student loans has the potential to add up. As you’re preparing to buy your first home, reducing debt may change your budget so you have money to put into savings or more of your paycheck available to spend on your monthly mortgage.

To determine where to start, review which of your balances has the highest annual percentage rate (APR). It should be listed on your monthly statement. If the interest rate on these debts is high, less of your minimum monthly payment is going to pay off the amount you first borrowed.

Focus on paying those high-interest balances first. If one credit card has a 13% interest rate, it deserves more attention than one with a 1% interest rate.

Finally, consider consolidating your debt if it reduces your interest rate.

Rebuilding your credit

Video Transcript

[Upbeat instrumental music]

[Person walks across the screen with text The Path to Good Credit; text shifts to show text Starts Here]

[Video title on screen How do I rebuild my credit? with icon of lightbulb]

Even if you’ve had credit trouble in the past, you can improve your credit.

[Icons of credit card, book, and smile in text bubble; animated line moves up and across the screen to get to another icon of a credit card and book; magnifying glass icon animates in over the other icons]

A positive trend will appear in your history right away and show that you’re back on track. Recent history is more important to your credit score, so the sooner you start, the better. The most important thing is to get back to making your payments on time. Pay at least the minimum on all of your accounts. If you can, paying more than the minimum is even better.

[Arrow animates through large icon of a calendar; icons of dollar bills animate across the screen; transition to icon of credit card and book turning pages]

Also, try to avoid closing the accounts you’ve had open the longest. Your credit history looks better if you have a lengthy history with at least one lender.

[Person on screen holds up her hand with icons of credit cards appearing that they are in her hand; arrow animates through and image transitions to the same woman acting like she is swiping her credit card through an illustration of a cash register]

If you’re having trouble qualifying for credit, a secured credit card may be an option. It’s a good way to start to use credit again and when you make your payments on time, you’ll begin rebuilding your credit history.

[Arrow animates through the screen from left to right and icons of credit card, book, and smile inside a text bubble appear]

If you follow these steps, your credit score should steadily improve with time. Together, we can get you back on the path to good credit.

[Text on screen says The Path to Good Credit]

[Theme music and Wells Fargo logo]


The condition of your credit will impact your ability to get a loan for a home. Managing and improving your credit is an ongoing process. The Wells Fargo Smarter Credit™ Center outlines seven basic tips:

  1. Keep track of your progress.
  2. Pay bills on time.
  3. Keep your balances low.
  4. Avoid using your full credit limit on any of your credit cards.
  5. Keep unused accounts open.
  6. Be careful about opening new accounts.
  7. Diversify your debt.

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