Excessive new cards being opened will hit your credit score, but opening one card, 6 months before you apply for any mortgages, won’t ding your score.

Keep in mind that the goal isn’t only to save money on mortgages… other goals include simplifying your financial life by cutting out clutter and staying on top of how the rest of the world perceives you by keeping a clean credit report on which you are familiar every item.

You don’t want to look at your credit report one day and say, “What card is this, that I haven’t used in 5 years!? I didn’t even know I had that account.”

Mortgage rates, like credit card rates, are more often tied to your FICO score.

FICO ranges from 350 to 850. 350 is the base, and the other 500 is based on the following factors:

payment history – No lates = higher score. About 35% of the 500

Ok, you got this part correct. Cleaner is better. Got one account with a 30 day late 2 years ago? Send a Goodwill letter to the Credit Card company. Point out how you have made payments on time for the past X months and ask them to remove the late from the credit report. Worst they can do is say no, best is that you get another clean aged account.

amounts owed – Low utilization. Limit of 1k, balance of 900 = 90% = bad. Limit of 10k, balance of 1k = 10% = good

about 30% of the 500 points

OK, you do have that mentioned. Low debt to available credit, or utilization.

Closing cards with no activity hurts here because you lose credit limits, without balances (0% utilizatin cards). If people close the card and open a new one with a lower limit, then utilization is shot. Not all companies will allow credit line consolidations.

length of credit history – Higher Average age = better score

about 15% of the 500 points

Here is where I disagree. Closing Inactive cards and opening new ones will lower your average age.

new credit – opening a new credit card, new loan, etc.

about 10% of the 500

excessive inquires will negatively affect the score, and could cause other card issuers that perform reviews to lower credit limts, or up APR. So while some new is good, too much can be a negative.

types of credit – Credit mix, loans, credit cards, store cards

Best advice for preparing for a mortgage.
1) Pull reports – check for any inaccuracies. I beleive the FTC found that 70% of reports contain some sort of error in reporting, which could be negatively impact your score. This should be done 6 months prior to applying, since disputing inaccurate information takes time.
2) If you must open new accounts, this should also be done 6 months before hand. This is primarily to let the negative affect of any inquires age, and have less weight.

There are a lot of sources for credit information out there.

This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.

Once a year from each of three = three different credit reports each year.

So I just had to go look at my bookmarks to see if it was time to run one, and if so, which one. This is the first time I’ve relied on this trick and it worked like a charm – I’m running my report right now.

Re: high available credit amounts – so if I have two credit cards with ~12k limits on each, and no balance, should I ask the lenders to lower the limit?

why is this positive?

I have a high available credit to debt ratio, not sure about available to income but it’s nearly 1:1

I just wrote a post about this, actually: link