What can a borrower do to improve their credit score before applying for a mortgage?

Paying down existing credit card balances is a highly effective strategy for a borrower to improve their credit score before applying for a mortgage. Credit scores are significantly influenced by the ratio of credit used to total credit available, known as the credit utilization ratio. By reducing the balances on credit cards, the borrower decreases this ratio, which can lead to an improvement in their credit score.

Moreover, demonstrating responsible credit behavior, such as making payments on time and keeping debts lower, can positively influence a lender's perception of the borrower’s creditworthiness. This is particularly important when seeking approval for a mortgage, as lenders are looking for borrowers who pose a lower risk.

In contrast, ignoring existing debts would likely have a negative effect on credit scores, as unpaid debts can result in late payments and increasing interest. Opening several new credit accounts could temporarily decrease credit scores due to hard inquiries and could also increase credit utilization if the new accounts carry balances. Closing old credit lines tends to shorten credit history, which is a vital component of credit scoring, and can also increase the utilization ratio if it reduces overall available credit.