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How Credit Card Debt Can Hurt Your Chances of Getting a Mortgage, and How to Get It Under Control

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canstockphoto3957472If you’re applying for a mortgage, it’s probably not news to you that they will check your credit score when you submit your application. If you have a large burden of credit card debt, this could seriously hurt your chances of being given a mortgage, even if your financial history is otherwise spotless. Why will a home loan lender deny you just for having credit card debt? And what can you do to get your debt under control?

Why Credit Card Debt Matters

Carrying large credit card debt balances, especially across more than one card, can be deadly when it comes time to apply for a mortgage. While there are lenders who will still lend to you, carrying credit card debt that you are just managing, but not really paying down, can harm your ability to get the mortgage that you want or need, which can prevent you from getting the home you want.

Carrying credit card debt that you aren’t making an effort to pay down could tell a lender that you aren’t serious about or aren’t able to meet your financial obligations. As you can expect, they don’t want to lend to someone who can’t meet their financial obligations. So, what can you do?

How to Get Credit Card Debt under Control

Start with your largest balance and start paying it down. You will likely have to cut some things out of your budget in order to free up money to do this, but once you’ve paid off a large chunk of your debt, you’ll see that it’s worth it. Even paying an extra hundred dollars a month can cause your debt to dwindle over the year and show lenders that you are serious about improving your credit score.

If you have more than one balance across multiple cards, it might also be a good idea to start with the one with the highest interest rate. You don’t have to pay off all of your balances at the same time. Start with one, pay it off, and then move on to the next. Don’t move your debt from card to card—that can lead you into a web of self-deception that makes you feel like you’ve taken care of the problem, when in reality, it still exists.

AUTHOR

Matt Demorest, President

Matt is the President and Founder of HomeSure Lending. He has extensive experience working in mortgage, finance, business development, business operations and non-profits. Matt holds a Masters Degree in Youth Ministry Leadership. NMLS #1011726

All stories by: Matt Demorest, President

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