If you’re planning to buy a home soon — or are already in the process of getting a mortgage — you may be eyeing credit cards with no annual fees or 0% APR offers as you get ready to deck out your new space with furniture, smart home upgrades and new appliances.
But opening a new credit card during the mortgage application process can end up costing you. Yes, opening a credit card and managing it responsibly can help build your credit, but the timing isn’t ideal when you’re preparing to buy a home because it could affect the mortgage rates and fees a lender offers, or, in some cases, even put your mortgage approval at risk.
While opening a new credit card may seem harmless when applying for a mortgage, doing so could influence several factors lenders evaluate, including your credit score, debt obligations and overall credit profile.
Ryan Hayes, head of field sales for Chase Home Lending, said opening a new credit card during the mortgage process can be somewhat risky, especially after you’ve submitted your application and before closing. New accounts can quickly shift key parts of your credit profile right when lenders are taking a close look.
Your credit report shows your creditworthiness and financial behavior, including your balances on credit cards and loans and your repayment history. When you open a new credit card, the issuer reviews your credit report, which is called a “hard pull” or hard inquiry.
