Credit Mistakes to Avoid Before Applying for a Mortgage

Buying a home is one of life’s biggest milestones. It’s exciting, nerve-wracking, and honestly, a little overwhelming - especially when it comes to applying for a mortgage. You may be dreaming of your perfect kitchen or cozy backyard, but if your finances aren’t in order, that dream can quickly hit a roadblock.

Before you meet with a lender or start house-hunting, let’s talk about some common credit mistakes people make before applying for a mortgage - and how to avoid them. Trust us, your future self will thank you.

These Simple Credit Moves Could Delay or Deny Your Mortgage

1. Treating Your Credit Score Like a Mystery

Your credit score is like your financial report card. It tells lenders how reliable you’ve been with money in the past. A high score means lower interest rates and better loan options. A low score might get your mortgage application denied altogether.

And here’s the kicker - some people apply for a mortgage without even knowing what their credit score is.

Don’t be that person.
Check your score using a free service or your bank’s online portal. Look for errors on your credit report and dispute them if needed. Just knowing your number gives you power - and time to improve it if necessary.

2. Opening New Credit Accounts (Right Before Applying)

This mistake is more common than you’d think. Let’s say you're applying for a mortgage, and at the same time, you decide to open a new credit card to get reward points - or maybe you’re tempted by that 0% financing offer on a new TV.

Bad move.

Opening a new credit account creates a “hard inquiry” on your report, which can temporarily lower your credit score. Plus, it changes your debt-to-income ratio - something lenders watch like hawks.

Bottom line?
Hold off on new credit cards, car loans, furniture financing, or anything else that affects your credit until after the mortgage is finalized.

✅ Pro tip: Avoid applying for any type of new credit at least 3–6 months before you plan to apply for a mortgage.

Get to Know the Difference Between Soft Credit and Hard Credit Check!

3. Maxing Out Your Credit Cards or Making Big Purchases

Picture this: You’re finally pre-approved for a mortgage, and to celebrate, you splurge on a new laptop, a vacation, or even new furniture for your future home.

Sounds fun - until your lender checks your credit again before closing and sees your balances have shot up. Now you’re in hot water.

Why it matters:
Maxing out credit cards increases your credit utilization ratio (how much credit you’re using versus how much you have). This can drop your credit score and even cancel your mortgage approval last minute.

✅ Goal: Keep your credit usage under 30% of your total limit—and under 10% if you want to look extra polished to lenders.

4. Forgetting One Simple Rule: Pay on Time

Payment history is the single biggest factor affecting your credit score. One late payment can stay on your report for up to seven years.

✅ Easy fix: Set up autopay or calendar reminders to ensure nothing slips through the cracks, especially in the months before your mortgage application.

5. Shuffling Balances Around Without Strategy

Transferring debt from one card to another might help short-term, but lenders look at your overall financial picture. Moving balances can make one card look maxed out while another has zero—and that lopsided view can drag your score down.

✅ Better approach: Focus on paying down balances instead of simply moving them around.

6. Emptying Your Savings for a Big Purchase

Buying a car? Booking a vacation? Paying off student loans all at once? All these could impact your liquid reserves - money lenders want to see in your bank account as a safety cushion.

✅ Play it smart: Keep your savings intact until after you’ve closed on your home.

7. Receiving Mystery Deposits Without Paperwork

A gift from family or a side hustle deposit? That’s great - but if it shows up in your account without proper documentation, your lender may question its origin. Large unexplained deposits can delay underwriting or trigger extra scrutiny.

✅ Keep records: If someone is gifting you money for your home, have them write a gift letter and include bank statements showing the source.

Get Pre-Qualified for a Mortgage!

Every financial decision you make in the months before applying for a mortgage matters. By avoiding these credit mistakes, you’re not just protecting your score - you’re setting yourself up for success when it comes to getting the best possible loan terms.

Altgage helps buyers prepare, plan, and qualify with confidence. Whether you’re a first-time buyer or a seasoned homeowner, our goal is to make the mortgage process easy, transparent, and tailored to your unique situation.

Check today’s rate and let’s build your mortgage game plan together.