Improving Your Credit Score Before Applying for a Mortgage: Part 1

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If you are hoping to get an approved mortgage for that home you are dreaming about, but your credit needs a little work, there are a few options you have. Working to improve your credit score before you apply for that mortgage means preparation and time. Here are a few tips to help you.

In the six months prior to applying for a mortgage, plan to do (or not do) these three things:

Check Your Credit Report

Get a copy of your credit report and look it over thoroughly. Check it for errors and if you find any, work to get those mistakes fixed. You can get free copies of your credit report from all three of the major credit reporting agencies once every 12 months. Get all three and compare them to make sure they are all correct as an error on just one report can affect your credit score.

No New Credit Cards

Don't fill out any new credit card applications or open any new credit card accounts. Mortgage lenders will look at all credit inquiries and take those into account when considering approving you for a mortgage. Newly opened credit cards could mean additional debt that hasn't yet shown up on credit reports, and as a result the lender may be concerned that you have more debt than you can handle.

Don't Close Your Credit Cards

It isn't a bad thing to close credit cards that you don't use in order to avoid annual fees, but don't do it within six months of applying for a mortgage. Lenders look at how much of your available credit you have used and closed accounts can give the impression that you have taken on more debt than you can pay back. Keep those cards open for now and be sure not to use them.

Pay close attention to your finances before you plan to apply for a home loan. Check out your credit reports and keep your credit cards status quo. Six months before applying for that mortgage is the perfect time to start getting everything in order.

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