What Factors are in My Credit Score for a Mortgage?

4. Avoid Opening New Accounts

While it might be tempting to open a new credit line possibly for furniture, for miles or to improve your credit mix, doing so can lower your average account age and have a temporary impact on the score. Each hard inquiry can also affect the score. Therefore, try to avoid applying for new credit tradelines prior to to applying for your upcoming mortgage.

5. Keep Old Accounts Open

Some individuals don't realize it and quickly will close out a credit card. The length of your credit history matters. For this reason, try to avoid closing old credit accounts even if you don’t use them regularly. Keeping them open can help improve the average account age, and potentially have a more positive influence on the credit score. This is especially important when you are planning to purchase or refinance a mortgage for a home.

6. Diversify Your Credit

The credit bureaus will consider the different types of tradelines an individual has on their profile. With a mix of different types of credit such as credit cards, vehicle loans, furniture loans or other installment loans can help improve your score. However, only take on new credit if you can manage it responsibly. For instance, if you only have credit cards, consider applying for a small personal loan to diversify.

7. Use Credit Responsibly

If you have one or two credit cards, or possibly several credit cards, use them sparingly and prioritize paying the balances off each month. A responsible usage pattern demonstrates to financial institutions that you can manage your credit wisely. If you don’t have credit cards, consider getting a secured credit card to build your credit history.