Protecting Your Credit Rating

Protecting Your Credit Rating

Q: I have been reluctant to make an offer on the home I like because I am afraid it will negatively affect my credit score. I know how important credit is, particularly the FICO score, so I’m afraid to make such a large purchase. Do you have any advice for me?
— T. Jackson, Indianapolis

A: If you purchase a home, your credit score may go down, but not significantly. As long as you make consistent, on-time payments, your credit score will remain in good standing.
I wouldn’t let a few points off of my credit score keep me from purchasing a home. In the meantime, if you’re concerned about protecting your credit rating:

  • Check your credit report at before getting a mortgage. You’ll be able to get your credit score and see if there are any errors on your report.
  • Don’t make any big purchases or open any new lines of credit before you buy the home. This could increase your debt-to-income ratio and decrease your score.
  • Make sure you have cash on hand. In addition to your down payment, have some money saved for closing costs and other fees.

For more information, read Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number that Shapes Your Financial Future by Liz Pulliam Weston (Prentice Hall; $17.95).