It is not wise to open a new credit card if you are planing to get a home mortgage in 6 months. Opening new credit card will result in you having a low credit score when you apply for the home mortgage. This is because the credit bureau is not yet sure whether you are able to cope with the new credit. The reduction in your credit score is not worthwhile for the few percentage of discount you get from the credit card. If you have other existing credit cards, you don’t have to close them because they will help to give a bit of a boost to the credit score.

If you promptly pay back the credit card balances in full, your credit score will slowly increase and it will help you to get a better APR interest rate for the mortgage. Having a higher level of credit score means that you stand a better chance of getting approved for the mortgage. You can maintain up to have 3 – 6 credit cards but you must remember to always settle the outstanding balance in full by the monthly deadline.

A late credit card payment can cause you to lose over 100 points in your credit score. When you are late in payment, the bank will forward your debt over to the collection agency. You should review your most current credit report to see if there is any unpaid debt that is causing your credit score to drop. In this way, you can quickly take action to resolve the debt noted on the credit report and improve your credit score. You must not dispute anything on the credit report when you are a few months away from applying the mortgage because it can delay the approval of your home mortgage loan.

It is important that the credit utilization of your existing credit cards is not above 30%. Maxing out the credit card can lead to a loss of at up to 45 points in your credit score. If you spend too much money on the credit card, most of your income will have to be used to repay the outstanding debt. As a result, you will have little money left to repay the home mortgage.

It is not the total amount of debt that the mortgage lender look into when considering your mortgage application. Rather, it is how much portion of your income assigned to paying back the debt. The majority of the mortgage lenders will approve your application if your debt to income ratio is less than 45%. You can apply for as many credit cards with good perks as you want or close any existing credit card after finalizing on for the home mortgage.