Protect your credit score before buying a home
New accounts could have a negative impact
InvestigateTV - Buying a home is the biggest investment many people will make in their lifetime. Getting the best interest rate on a home mortgage will save thousands of dollars over the term of the loan.
There have been three increases in interest rates this year, raising the costs for buyers paying with a mortgage. A high credit scores makes it easier to access low interest rates.
One way to maintain your credit score is to refrain from opening new lines of credit.
Cherry Dale, a financial coach with the Virginia Credit Union, said every time you apply for credit there’s a hit to your credit score, especially if you’re looking to buy a big ticket item, like a car.
“In 2022, if you’re getting ready to get a mortgage this year you do not want to open up any new credit for at least six months before that,” Dale said. “You apply for that mortgage you want to keep it clean.”
Dale said if you open new accounts in the six months prior to your home purchase, the number of inquiries or applications you make factors into your score. If the number drops, it could make your mortgage interest rate higher.
Rocket Mortgage shows that a 1% increase in your mortgage rate could cost you hundreds of extra dollars a month.
Dale suggested you also pay your bills on time in those six months prior to purchase. Every action you take can improve your credit standing and save you money.
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