man embracing woman as they admire view from their new home

Homes are expensive, and if you’re like most people, applying for a mortgage is the best and fastest way to become your own landlord.

While it’s not the only qualifying factor, one of the first important steps in being successful when applying for a mortgage is to raise your credit score as high as possible.

If you have one or are considering getting a credit card, here are five tips and strategies you could use to your advantage when or before applying for a mortgage.

smiling man holding credit card in one hand and phone in other

Credit Card Tips

1. Increase Your Credit Score by Using Cards Responsibly 

Since credit cards, as the name suggests, can affect your credit score, using them responsibly is key. This means limiting new applications, while also avoiding maxing out existing accounts.

It also means resisting the temptation to use your card every time you visit a mall or an online store. It is generally safe to keep your card’s utilization ratio below 30% whenever possible, so you don’t accrue unnecessary debt that could damage your score.

2. Compare Fees, Interest Rates, and Perks before Selecting a Card 

If you intend to apply for a mortgage in the near or far future, you want to make decisions that won’t bring unnecessary financial burdens.

As much as a credit card can help you build credit and even improve your score, this makes it important to choose wisely — comparing offers so you can select the one with the most affordable rates.

Besides the interest rates, carefully consider all the associated costs, such as annual fees, signup fees, and late payment penalties. These can further increase the cost of borrowing money in the long term.

And, if we consider card rewards programs, some options offer perks such as cash back on purchases, travel miles, and so forth.

Just about any credit card can help boost your credit score, but it is wise to choose one that suits your needs best — one whose terms you can comfortably handle.

This can help prevent a range of potential financial problems down the road.

3. Leverage Credit Card Rewards Programs for Additional Funds 

As hinted above, many credit cards offer rewards and cash-back programs that can be beneficial when preparing to apply for a mortgage.

Consider using these programs to accumulate additional funds, which can help cover closing costs and home inspections, as well as offset down payments.

Every little bit helps! 

Wisely approached, taking advantage of these rewards programs from your credit card can help you achieve your home-ownership goals on time.

4. Track and Monitor Spending Habits 

It is crucial to pay close attention to your spending habits when applying for a mortgage, as this can directly impact your chances of getting approved for one.

As part of using your card responsibly, this means staying on top of purchases and making sure that everything within your budget is accounted for.

Additionally, keep an eye on potentially damaging elements like overdrafts or late payments, ensuring they do not appear on the Credit Report — which creditors review before loan approval.

By tracking and monitoring your spending, you can remain confident in the accuracy of your financial data and its effects on getting approved for a mortgage.

5. Pay your Credit Card Bills on Time 

Paying your credit card bill(s) is critical when trying to build and/or maintain a good credit score. It is especially important when applying for a mortgage, or any loan for that matter.

As opposed to missed payments, delinquencies, and defaults, having all your credit card bills paid on time sells you as a creditworthy individual in the eyes of lenders.

Timely payments could even (significantly) raise the bar on the mortgage amount you qualify to borrow.

Besides, aiming to pay off your entire balance each month will also help avoid accumulating further, unnecessary debt! The takeaway here is to be prompt and diligent about paying off all credit card bills as soon as possible to avoid future headaches.

Overall, being smart with credit cards is key when attempting to score a mortgage.

Learning how to use them responsibly, leveraging rewards, and making timely payments can be major game-changers for aspiring homeowners.

Hopefully, these quick tips will help improve your chances of getting that dream home or property that you’ve desired for so long.