- Trans Union Corporation
- Don't close credit card accounts. Keeping lines of credit open is beneficial to your income-to-debt ratio and will help you keep your FICO scores higher.
- Don't max out or consolidate credit cards. Credit card companies like it if you only use about 30% of your available credit on your card. You're better off having small balances on multiple cards than a large balance on one card.
- Don't apply for new revolving credit, consolidate or transfer balances. It's tempting to buy new furniture for your home, but don't open that account until after your loan closes. You don't want “inquiries” to be raised in the scoring algorithm.
- Don't change jobs right before you apply for a home loan. If you have to change jobs, changes within the same field are considered more favorably in scoring.
- Do pay all bills on time and with at least the minimum payment due. Lenders like on time payment histories.
- Do pay down your debt. Lower income-to-debt ratios are attractive to lenders. Start by reducing credit card balances first, beginning with the balances with the highest interest rates. Revolving credit is considered riskier debt than installment loans such as student loans or car payments.
- Do shop lenders simultaneously. Credit score software takes into account several inquiries from mortgage lenders as normal, but if you space rate-shopping out over weeks or months, it could impact your credit score.
Remember, mortgage lenders are most interested in your ability to repay the loan. The most important factors are job and debt payment history. Job security (long-term employment in the same field) and on time credit payments are the best ways to build and protect your credit.