Opening a new credit card can hurt your mortgage approval. Here’s what you need to know

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.

How opening a new credit card could affect your mortgage approval

While opening a new credit card may seem harmless when applying for a mortgage, doing so could impact 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.

Hard inquiries can lower your score

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. These hard inquiries typically cause your credit score to dip, which isn’t ideal when you’re applying for a mortgage, as lenders use your score to assess risk and determine the rate they can offer you.

New accounts can make your credit history seem shorter

Your average age of accounts is the mean age of all your credit card accounts, and it makes up 15% of your credit score. Generally, the longer your credit history, the better it is for your score. However, Hayes pointed out that when you open a brand-new account with zero history, you’re lowering that average, which can drag your credit score down.

At the same time, lenders want to see a long, consistent track record of responsible credit use. When you shorten your credit history by opening a new card, your profile can look less established and potentially riskier.

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Credit scores and mortgage approval

While credit score ranges vary by model, below is a general breakdown of how mortgage lenders typically evaluate borrowers:

800 to 850 (Excellent): Lowest risk
740 to 799 (Very good): Strong profile
670 to 739 (Good): Generally considered low risk
580 to 669 (Fair): Higher risk, often labeled “subprime”
300 to 579 (Poor): Unlikely to qualify for most loans or credit cards

New credit inquiries make up about 10% of your credit score, so opening one card typically only has a modest impact, typically just a five- to 10-point drop. Still, opening a new account while applying for a mortgage isn’t ideal timing.

“Lenders expect financial stability during the mortgage-approval process, so any new credit card activity could raise some risk flags,” Hayes said. “So, while not automatically disqualifying, opening a new card during the process can impact your qualifications.”

Beyond improving your chances of securing better rates, a higher credit score can also help you qualify for a lower down payment, a larger loan and lower fees. Because maintaining the strongest score possible is key to saving money on your mortgage, opening a new credit card before or during the application process could undercut your ability to get the best deal.

Avoid these other financial missteps

Once you’ve begun the mortgage process, Hayes said it’s essential to keep your finances stable. That includes holding off not only on opening a new credit card but on making any large purchases. In other words, this isn’t the time for a shopping spree.

“Prospective homebuyers should avoid making any significant changes in their personal finances during the process,” he said. Ultimately, you want to avoid anything that could weaken your application or put your mortgage approval at risk.

Beyond opening a new credit card, it’s a good idea to steer clear of the following:

Financing large home expenses
Buying a car
Missing credit card payments
Closing existing credit cards
Changing your job or career
Making unusually large deposits
Switching banks

You may think you’re in the clear once you’re preapproved for a mortgage and that it’s safe to open a new credit card, but it’s ultimately not a wise move. Hayes said most lenders will check your application more than once, with the initial review happening during your application, before you’re preapproved. “A final check typically occurs one to 10 days before closing, to ensure there have been no new debts, missed payments or major credit score changes.”

How to strengthen your mortgage approval odds

If you know you’re planning to get a mortgage or home equity loan or refinance your mortgage soon, having a handle on your credit ahead of time can help ensure your score is in an optimal position by the time you apply.

Some steps you can take to set yourself up for mortgage approval success include the following:

Holding off on opening any new credit card accounts: Wait at least a month after you close on your mortgage to open any new credit lines.
Understanding your credit score: Review where your credit stands and if there’s room for improvement.
Reviewing your credit report: Make sure there aren’t any errors on your credit report. If you find anything incorrect, contact the credit-reporting companies, file a dispute if necessary and provide supporting documentation.
Reducing your debt: Pay down your balances as much as possible to lower your debt-to-income (DTI) ratio, a measure of your total monthly debt compared with your gross monthly income. Most mortgage lenders prefer an overall DTI — including your mortgage payment — below 43%, though there may be some flexibility based on your financial profile and loan type.
Making on-time bill payments: Late payments will likely lower your score, so be sure to pay all your bills by their due dates.

According to Hayes, if you’ve opened a new credit card during the mortgage process without realizing the potential pitfalls, the key is to inform your lender immediately. “They can pull an updated credit report and confirm your loan still qualifies as expected,” he said, “and they will let you know if there’s anything you should do next.”

The point is that you want to show mortgage lenders that you’re a financially stable and low-risk borrower. Even if the impact on your credit score seems small, opening a new credit card while buying or refinancing a home can stand out to lenders and raise questions about your financial stability. So just make sure to ask yourself how imperative it is that you get a new credit card when applying for a mortgage and if it’s worth the risk.

How we evaluate mortgage lenders and rates

According to CNN Underscored’s mortgages and loans methodology, we evaluate mortgage lenders based on a 100-point scoring system. Based on their internal scoring results in each category, lenders rank in one of our weighted lender tiers.

Our weighted lender tiers

Exceptional: 95 and above
Highly recommended: 86 to 94
Recommended: 80 to 85
Limited appeal: 75 to 79
Proceed with caution: 74 and below

Lender rates vs. borrower accessibility

Sure, a low interest rate is important, but the lowest advertised rates are typically reserved for borrowers with the strongest financial profiles. That’s why we dig into not only how competitive lenders rates appear on the surface, but also how accessible their loan products are for a broad range of borrowers.

Beyond rates: Evaluating the borrower experience

We consider how accessible lenders are through their customer support channels, the quality of the digital experience they offer and how quickly a borrower can expect to typically close on a loan. We also evaluate whether lenders provide reasonably attainable rate or fee discounts that can help reduce borrower costs.

FAQs

Should I close existing credit cards before applying for a mortgage?

No. Beyond your credit score, mortgage lenders also review your credit utilization ratio, which is the portion of your available revolving credit you’re using. The lower the ratio, the better because it signals to lenders that you’re not relying on credit for everyday spending. For example, if you have $12,000 in available credit across all your cards and you have $3,000 in charges, your utilization ratio is 25%. However, if you close a credit card with a $6,000 credit limit, then you push your utilization up to 50%. To maintain a low utilization ratio before you apply for a mortgage, keep accounts open and pay down balances. Aim for a utilization ratio of 30% or less to improve your mortgage approval chances.

How long should I wait to open a new credit card after getting a mortgage?

Hayes said it’s a good idea to wait at least 30 days after you close to open any new lines of credit. “By then, the mortgage will have appeared on your credit report and your financial profile will have stabilized,” he said. “At the minimum, wait until the loan is fully funded and recorded. This usually takes place a few days after closing.”

How much will my credit score drop if I open a new credit card?

Opening a new credit card will typically lower your credit score by about five points, with the impact lasting only a few months. While this may seem minor, Hayes said recent credit score drops can raise red flags for mortgage underwriters regardless. If you have limited credit history, you should be especially cautious about any actions that could lower your score during the application process, as even a small dip could stand out to mortgage lenders.

Meet our expert

For this article we consulted the following expert to gain their professional insights:

Ryan Hayes, head of field sales at Chase Home Lending

Why trust CNN Underscored

CNN Underscored’s Money team is guided by a transparent methodology, independent editorial judgment and a commitment to helping readers understand which home loan products genuinely deserve their consideration. Our mortgage rate and lending coverage is grounded in analysis of mortgage rate trends, lender offerings and borrower priorities, with the goal of helping readers navigate an often complex borrowing landscape with clear, practical guidance.

For this article, CNN Underscored money writer Robin Rothstein drew on more than five years of experience covering home lending, mortgage rates and the economic factors that shape the housing market. That expertise, along with ongoing analysis of lending trends, helped shape practical guidance for home buyers looking to maximize their chances of mortgage approval and secure the best possible loan terms.

Some information for this report was gathered via edition.cnn.com.