To help you protect your credit before taking the plunge into homeownership, here are five surprising ways you could unintentionally damage your score.

1. Closing Old Credit Cards

You might have a few old credit cards hanging around that you no longer use, and it may seem like a good idea to close them to reduce clutter. However, closing a credit card can actually hurt your credit score. One factor that impacts your score is the length of your credit history. By closing old accounts, you shorten your credit history, which could lower your score. If the card has no annual fee and isn't costing you anything, it’s usually better to leave it open.

2. Paying Off All Debt

While paying off debt might seem like an obvious way to improve your credit, it could actually have the opposite effect if you pay everything off completely. Lenders like to see that you can manage debt responsibly. If you pay off all your debt, you may end up with little to no active credit accounts, which could decrease your score. It’s often better to maintain small, manageable balances and make consistent payments over time, as this shows you can handle credit wisely.

3. Co-Signing a Loan

Co-signing a loan for someone can feel like an act of kindness, but it can be risky for your credit. If the person you co-signed for misses a payment, that missed payment will show up on your credit report as if it were your own. A single late payment or default could significantly impact your credit score, making it harder to qualify for a mortgage when the time comes. Before co-signing, carefully consider the potential consequences for your credit.

4. Applying for Credit

When you’re in the market for a new home, you may think it’s a good idea to shop around for the best mortgage rates by applying to multiple lenders. However, applying for several loans in a short amount of time can negatively affect your credit score. Each credit inquiry can cause a small drop in your score, and too many inquiries can signal to lenders that you're in financial distress. If you plan to apply for a mortgage, try to limit the number of credit inquiries and focus on applying for home loans within a short window of time (typically 30 days) to minimize the impact on your score.

5. Ignoring Small Bills

It’s easy to overlook smaller bills, but even small debts can have a big impact on your credit. Whether it’s an unpaid cable bill or a forgotten subscription, failing to pay off small bills can lead to collections, which can stay on your credit report for up to 10 years. Before you apply for a mortgage, make sure you’ve paid off any outstanding balances, no matter how minor they may seem.

Protect Your Credit and Your Future Home

Taking care of your credit is essential when you’re preparing to buy a home. While the common advice is to pay bills on time and avoid excessive debt, it’s just as important to understand the less obvious ways you could be unintentionally harming your score. By avoiding these five surprising credit pitfalls, you can ensure your credit is in the best shape possible when it’s time to apply for your mortgage.

Ready to start your home-buying journey? Make sure your credit is on track before taking the next step—contact us today to learn more about how you can improve your credit and secure the home of your dreams!