It may seem logical to pay off old debt, close accounts, or eliminate outstanding balances before applying for a mortgage. However, certain actions can actually hurt your credit score rather than help it.

1. Closing Old Accounts Can Shorten Your Credit Report History

Lenders look at the length of your credit history to assess financial responsibility. If you close an old account with a positive payment history, it can reduce the average age of your credit accounts, negatively affecting your credit report.

2. Paying Off Collection Accounts Doesn’t Always Help Your Credit Report

If you have an old debt in collections, paying it off doesn’t necessarily remove it from your credit report. In some cases, settling old collections can update the last activity date, making the negative mark appear more recent, which can lower your credit score.

3. Reducing Credit Card Balances Can Impact Your Credit Utilization

Your credit report factors in credit utilization—the percentage of available credit you’re using. If you pay off and close a credit card, your total available credit decreases, which can increase your utilization ratio and lower your credit score.

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Why You Should Consult North Star Mortgage Before Changing Your Credit Report

Before making any credit decisions, consulting with a mortgage expert at North Star Mortgage Network can help you:

✔ Avoid common credit mistakes that lower your credit score
✔ Get a personalized plan to improve your mortgage eligibility
✔ Maximize your credit report score before applying for a loan
✔ Understand which debts to pay off—and which to leave alone

We analyze your credit report and provide expert guidance on improving your credit for a mortgage. In some cases, keeping certain debts open, paying them down gradually, or even disputing errors can be more beneficial than simply paying off everything at once.

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Optimize Your Credit Report Before Applying for a Mortgage

Your credit report directly affects your mortgage qualification and interest rates. Making uninformed changes could cost you thousands in higher interest payments or even prevent loan approval.

Before making any adjustments to your credit report, contact North Star Mortgage Network for expert guidance. We’ll help you strategize the best approach to boost your credit and secure the best mortgage terms possible.

Call us today to schedule a consultation and get your credit mortgage-ready!