{"id":7379,"date":"2025-05-05T10:43:55","date_gmt":"2025-05-05T15:43:55","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=7379"},"modified":"2025-09-04T09:06:02","modified_gmt":"2025-09-04T14:06:02","slug":"what-homebuyers-need-to-know-about-credit-cards","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/what-homebuyers-need-to-know-about-credit-cards\/","title":{"rendered":"What Homebuyers Need to Know About Credit Cards"},"content":{"rendered":"\n

Credit cards and mortgages might seem like two separate parts of your financial life\u2014but when you\u2019re getting ready to buy a home, they\u2019re closely connected. How you use (and don\u2019t use) your credit cards can directly impact your approval odds, your interest rate<\/a>, and even how much you\u2019ll need for a down payment.<\/p>\n\n\n\n

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Credit card debt is at record highs<\/strong><\/h3>\n\n\n\n

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As of mid-2025, Americans owed about $1.21 trillion on credit cards<\/strong> (Federal <\/a>Reserve<\/a> Bank of New York<\/a>).\u00a0<\/p>\n\n\n\n

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High balances drive up your debt-to-income (DTI) ratio and lower your credit score\u2014two of the biggest factors lenders consider. Ideally, your DTI<\/a> should stay below 43%, and your credit utilization under 30% of your available credit. Both show lenders you\u2019re in control of your money.<\/p>\n\n\n\n

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Why you actually need a credit card<\/strong><\/h3>\n\n\n\n

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Some buyers think avoiding credit cards altogether will make them look \u201cresponsible.\u201d In reality, you need credit history to get a mortgage at all. Using a card, even for small monthly expenses you pay off in full, helps you build that history. Consistent use and on-time payments prove you can handle debt\u2014which makes lenders more confident you\u2019ll handle a mortgage.<\/p>\n\n\n\n

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Timing matters when paying down balances<\/strong><\/h3>\n\n\n\n

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If you\u2019re gearing up to apply for a mortgage, the timing of your payments matters. Credit card companies typically report balances once a month. Even if you pay your cards off in full, if the statement closes while you\u2019re carrying a balance, it can look like you\u2019re maxed out. That temporary spike can drop your score at the worst time.<\/p>\n\n\n\n

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If you\u2019re mortgage shopping, consider making an extra payment before your statement closes so your reported balance looks lower. It\u2019s a small detail, but it can make a big difference in your mortgage rate\u2014and when you add in the fact that lenders don\u2019t all price loans the same, it\u2019s smart to see how lenders stack up<\/a><\/strong> to see how much you could actually save.<\/p>\n\n\n\n

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The $0 balance misconception<\/strong><\/h3>\n\n\n\n

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Many buyers think you need to carry a balance to \u201cshow activity\u201d or \u201cbuild credit.\u201d Not exactly true. Paying off your balance in full each month is the best move. You still get the benefit of credit history, utilization, and on-time payments\u2014without throwing away money on interest.<\/p>\n\n\n\n

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Should you roll credit card debt into your mortgage?<\/strong><\/h3>\n\n\n\n

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Some homeowners consider using a cash-out refinance to pay off credit cards. While it can simplify payments, it usually means stretching short-term debt into decades-long interest\u2014and risking your home if habits don\u2019t change. For most buyers, it\u2019s better to focus on paying balances down before applying, not after.<\/p>\n\n\n\n

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The takeaway for homebuyers<\/strong><\/h3>\n\n\n\n

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Credit cards aren\u2019t just plastic in your wallet\u2014they\u2019re part of your mortgage application. Keep your utilization low, make payments early and consistently, and don\u2019t assume you need to carry debt to build credit. Done right, your credit card habits can save you thousands on your future mortgage. And when you\u2019re ready to borrow, don\u2019t just look at the interest rate\u2014see how different rates and points change your monthly payment<\/strong> <\/a>so you know it actually fits your budget.<\/p>\n","protected":false},"excerpt":{"rendered":"

Credit cards and mortgages might seem like two separate parts of your financial life\u2014but when you\u2019re getting ready to buy a home, they\u2019re closely connected. How you use (and don\u2019t use) your credit cards can directly impact your approval odds, your interest rate, and even how much you\u2019ll need for a down payment. Credit card […]<\/p>\n","protected":false},"author":31,"featured_media":7638,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[299,305,300,298],"class_list":["post-7379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-buying-your-first-home","tag-credit-cards","tag-debt-roundup","tag-homebuying"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2025\/05\/u6751982626_credit_cards._lots_and_lots_of_credit_cards_-cha_465112f8-fac5-414b-af64-00196df68b33_2.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=7379"}],"version-history":[{"count":5,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7379\/revisions"}],"predecessor-version":[{"id":7517,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/7379\/revisions\/7517"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/7638"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=7379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=7379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=7379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}