• Higher home prices and rising interest rates can make buying a home more challenging now.
• Raising your credit score is "one actionable thing buyers can do to save a little bit of money," a Zillow expert says.
• Here's how to get started, and which move will push your score up the most.

As today's prospective home buyers confront high home prices and rising interest rates, there's one thing they can do to save money — raise their credit scores.

"This is one actionable thing buyers can do to save a little bit of money in this market," said Amanda Pendleton, consumer finance expert at Zillow Home Loans.

A new analysis from Zillow finds home buyers with lower credit scores may pay $103,626 more over the life of a 30-year fixed mortgage loan than someone with an excellent score, based on the current price of a typical home, $354,165.

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Buyers with fair credit scores — between 620 and 639 — may be paying $288 more per month for their monthly mortgage payments compared to home buyers with excellent scores, between 760 and 850.

That difference is due to the interest rates those borrowers are charged. While a fair credit score qualifies for a 6.688% interest rate, an excellent score can command a far lower rate of 5.099%. The calculations are based on home values from the Zillow Home Value Index and interest rates from the FICO Loan Savings Calculator as of July 26.

Credit is one factor homebuyers can control

"Affordability is the biggest story of the housing market right now," said Pendleton.

"We've seen home values nationwide up nearly 20% year over year," she said. "When you combine that with these rising mortgage interest rates, the typical monthly payment on a home is 62% higher today than it was just a year ago."

If you're a buyer in today's market, a lot of factors are outside your control, Pendleton said. But you can control your credit and financial history.

Your credit score measures your likelihood of paying back a loan. Mortgage lenders use those scores to determine whether to offer you a loan, and the interest rate you will pay on that debt.

Your credit score is determined by factors considered on your credit report, such as your bill-paying history, unpaid debts, the number of outstanding loans you have, how long those accounts have been open, how much available credit you are using and new credit applications you have made.

Your credit score may vary depending on the company providing it. Scores typically range from 350 to 850.

Moves with 'the biggest impact' on your credit score

"It really does pay off for a buyer to take steps to improve their credit score and also shop around for a mortgage as we see rates climb," Pendleton said.

If you're thinking of buying a home, you want to think about your credit score at least six months ahead of that goal, Pendleton said.

First, check your credit report, which you can check weekly for free through the end of 2022, to help give you an idea of what a lender is going to see when they pull your credit. Generally, those free reports are available once a year.

Keep an eye out for anything that seems off, like incorrect information you want to dispute, or late payments you want to avoid in the future.

Then, make a plan based on where you stand looking at your current credit profile.

That may include paying down debt to less than 30% of your limit. "That's going to have the biggest impact on your score in a positive direction," Pendleton said.

Stay consistent with your bill payments, such as for your credit cards and car, and make sure they go through on time.

As you get closer to your home-buying goal, avoid making larger purchases that need to be financed, such as buying a new car or furniture, as that will negatively impact your debt-to-income ratio. Applying for new credit cards or loans can also hurt your score.

The good news is that you may be able to bring your credit score up in as little as three to six months, depending on your credit record, Pendleton said.

Moreover, if you are coming in as a first-time homebuyer with a lower credit score, explore other loans and programs that may be available for someone who fits your profile.