Introduction
Your credit score plays a major role in your ability to qualify for a mortgage and secure favorable interest rates. If you’re preparing to buy a home, it makes sense to focus on improving your credit—but too many eager buyers unknowingly make moves that hurt more than help.
Repairing your credit before applying for a mortgage is smart, but it’s essential to do it the right way. Here are five common credit repair mistakes to avoid, so you can boost your score and increase your chances of getting approved with the best possible terms.
1. Closing Old Credit Accounts
It might seem logical to close unused or old accounts, especially if you’re trying to “clean things up.” However, doing so can actually damage your score in two important ways.
Reduced Credit History Length
Credit scoring models reward long-standing accounts. Closing an old card shortens your average credit age, which can lower your score.
Higher Credit Utilization
Closing a card reduces your total available credit. If you carry balances on other cards, this increases your credit utilization ratio—a key factor in your score.
What to Do Instead
Keep old accounts open and active, even if you use them only occasionally. A long and healthy credit history is a positive signal to lenders.
2. Paying Off Collections the Wrong Way
It’s tempting to clear your credit report by paying off all collections immediately, but not all collections impact your score equally, and in some cases, paying them the wrong way can actually refresh their activity date—prolonging the negative effect.
What to Watch For
Some older collections are already having minimal impact, and paying them could cause them to reappear as recent activity.
What to Do Instead
Before paying off collections, contact the creditor and negotiate a “pay-for-delete” agreement—meaning the account will be removed entirely from your report once paid.
3. Taking on New Debt Too Close to Applying
Opening a new credit card or loan may boost your available credit, but doing it shortly before a mortgage application can backfire.
Why It Hurts
New accounts come with hard inquiries and a shorter credit history, both of which can temporarily lower your score. Also, lenders may view new debt as increased financial risk.
What to Do Instead
If you’re planning to apply for a mortgage within the next three to six months, avoid opening any new credit accounts unless absolutely necessary.
4. Disputing Accounts Right Before Applying
Filing a dispute on a questionable account is a good credit repair tactic—but not when you’re on the verge of applying for a mortgage.
How This Backfires
While a dispute is active, lenders may be unable to get an accurate automated reading of your credit report. This can delay the loan process or even trigger a denial until the dispute is resolved.
What to Do Instead
If you need to dispute something, do it early—several months before applying. Once you’re close to submitting your mortgage application, avoid making any changes that could freeze or alter your credit report.
5. Making Only the Minimum Payment
Paying your bills on time is critical, but simply paying the minimum balance won’t move the needle much on your score—especially if you’re carrying high balances on credit cards.
Why This Slows Progress
Your credit utilization (the amount of credit used compared to your limit) has a big impact on your score. If you’re only making minimum payments, it takes longer to bring those balances down, keeping your utilization high.
What to Do Instead
Aim to reduce credit card balances below 30% of your credit limit—ideally under 10% for the best results. If possible, focus on paying down high-interest cards first while maintaining timely payments across all accounts.
Conclusion
Preparing your credit before applying for a mortgage is one of the smartest things you can do—but it’s important to avoid well-meaning mistakes that could hurt your chances.
Keep your oldest accounts open. Pay off collections strategically. Avoid opening new accounts or disputing items close to your application date. And most importantly, work to lower your credit utilization—not just keep up with the minimums.
With the right approach, you can raise your credit score, reduce your borrowing costs, and step confidently into the homebuying process.
