When applying for a mortgage, one of the first things a lender will review is your credit report. A credit report is essentially a detailed snapshot of your financial history, showing how you’ve managed debt over time. It includes information on credit cards, student loans, auto loans, mortgages, and other installment debt. Lenders use this report to evaluate your ability — and willingness — to repay borrowed money, which directly impacts your loan approval and interest rate.

How Credit Scores Work

Most lenders in the U.S. use the FICO® credit score model, which ranges from 300 to 850. Here’s the breakdown:

• 300 – 579: Poor → Considered risky; may have trouble qualifying for most loans.
• 580 – 669: Fair → Subprime range; you may still qualify but likely with higher rates.
• 670 – 739: Good → Generally favorable; most lenders view this as a safe borrower.
• 740 – 799: Very Good → Better than average; likely to receive lower interest rates.
• 800 – 850: Excellent → Top-tier credit; qualifies for the best rates and terms.

 Common Pitfalls to Avoid

• Late or missed payments → biggest credit killer.
• Maxing out credit cards → spikes utilization ratio.
• Opening too many accounts → right before applying for a loan.
• Closing old accounts → shortens credit history.
• Co-signing loans → their debt becomes your responsibility too.
• Ignoring credit reports → errors go unnoticed and hurt scores.

Tips to Build & Protect Credit Before applying for a Mortgage

• Pay bills on time — even one late payment hurts.
• Keep credit utilization under 30% (ideally 10%) on revolving debt.
• Don’t apply for new credit right before buying.
• Check your credit reports at least once a year.
• Dispute inaccuracies with the bureaus.

Credit can either save you money or cost you big when it comes to buying a home. By avoiding common pitfalls and building good habits, you’ll put yourself in the best position for approval and the lowest possible rate.

 Jesse Young
Neighborhood Loans

jyoung@neighborhoodloans.com 
📞 817-939-1467 (Direct)