How can borrowers improve their credit score before applying for a mortgage?

Paying down debt and ensuring timely bill payments is the most effective way for borrowers to improve their credit score before applying for a mortgage. A significant factor in determining a credit score is the borrower’s credit utilization ratio, which compares current credit card balances to the total credit limits. By paying down existing debt, borrowers can decrease their credit utilization ratio, which can positively impact their credit score. Additionally, making all payments on time is crucial, as payment history is one of the most important components of a credit score. Consistently paying bills on time demonstrates creditworthiness and reliability to potential lenders.

In contrast, acquiring multiple credit cards could lead to increased debt and a higher utilization ratio, which may lower the credit score. Avoiding payments until the application process can result in missed payments, which would negatively affect the credit score and is not a responsible financial practice. Lastly, applying for several loans at once may trigger multiple hard inquiries on the borrower’s credit report, which can temporarily lower the credit score and give lenders the impression that the borrower is financially unstable or in need of credit, further reducing their chances of mortgage approval.