If you’re dreaming of purchasing a home, you’ve probably got a lot on your mind! From finding an agent and looking for homes, to saving for a down payment and getting approved for a loan: there’s a lot on your plate. In particular, finding a lender and being approved for a mortgage can be quite an involved process, especially if you’re unaware of your credit score.

Good credit is really key in life, essential for purchasing a car, getting a credit card, and of course being approved on a home loan. Poor credit can get your loan denied, or end up costing you thousands of dollars due to higher interest rates on your purchase. It’s for that reason that the first step in purchasing a home needs to be checking your credit score and cleaning up your credit history! A good score can be the deciding difference between finding your dream home and having to settle for less.

Here are six factors that could damage your credit score:

  • Not using your credit at all- Your credit score is a measure of your trustworthiness to lenders. While there are plenty of ways to hurt your reputation, it’s nearly as bad to never have a reputation at all! Building credit is an important part of raising your score. There are plenty of ways to build your credit, but for first time buyers especially, it’s the first place you should start!
  • Not paying your bills on time- You want lenders to know you’re fiscally responsible and prompt with your payments. Whether you have a long credit history or are just getting started, not paying your bills is a surefire way to negatively impact your score. Bills not paid within 30 days can and often will be reported to credit bureaus, even if you file for an extension or payment program.
  • Applying for too much credit- Every time you apply for credit, your credit score is “pinged”. Too many “pings” and your score will start to suffer.
  • Not having a diverse mix of credit- Once you’ve begun to build credit, it can really pay off to have multiple types of credit. While credit cards and car loans are often what comes to mind, some services such as renting a property can now be used to help boost your credit score. The more sources of positive credit history, the better.
  • Maxing out your limits- Maxing the limits on your credit cards should be avoided whenever possible! Not only will you have a lot to pay back, but it can also impact your score outright.
  • Closing credit cards- There’s always an appeal to avoiding credit cards and paying out of pocket when you’re financially stable enough to do so. However, closing out long-term accounts can negatively impact your credit score. That’s why it’s a good idea to keep a card account open, even if only for emergencies. If you can, make regular purchases and regular payments to keep your account active and in good standing. This is particularly important if you’re also no longer making a regular car payment, or have no mortgage history.

Having good credit is one of the best tools you can have in your toolbox; and its especially essential when searching for a new home (and the loan to purchase it). Poor credit is both preventable and fixable, if you pay attention and avoid the above common mistakes. Using credit doesn’t mean you’re bad with your money: in fact, using credit responsibly shows lenders that you’re someone they can trust!