Chapter 3
IN THIS LESSON
Why Credit Matters in Homeownership
Your credit history can play an important role in your ability to qualify for a mortgage and the terms you may receive. Understanding credit before you apply can help you make smarter financial decisions.
You'll learn: How credit affects mortgage qualification, interest rates, monthly payments, and what you can do to prepare your credit before purchasing a home.
Additional Credit Tips
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Credit is a financial tool that allows you to access money or products today and repay them over time, typically with interest.
Used strategically, credit can help you:
Purchase a home
Finance a vehicle
Access business funding
Build financial flexibility
Create opportunities you may not be able to pay for entirely in cash
Good credit can open doors.
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A qualifying credit score is one part of the mortgage approval process. Depending on the loan program and your overall financial profile, a score of 580 or higher may qualify you for certain mortgage options.
However, your credit score isn't the only factor lenders consider. You'll also need to meet requirements related to your debt-to-income ratio, income, assets, down payment, and closing costs.
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1. 10 Things to Do With Your Credit
1. Monitor Your Credit
Check your credit regularly and stay aware of changes.2. Verify Your Information
Make sure your personal information and accounts are accurate.3. Review Your Accounts
Look for accounts in good standing, inquiries, and anything unfamiliar.4. Dispute Inaccuracies
Challenge negative or incorrect information that does not belong on your credit report.5. Automate Your Payments
Put bills on autopay to help avoid missed payments.6. Organize Your Cards
Assign cards to specific expenses to make spending easier to manage.7. Pay Before the Statement Date
Paying down balances before the statement closes can help keep reported utilization lower.8. Request Credit Limit Increases
When appropriate, ask for higher limits to potentially improve your credit utilization ratio.9. Protect Your Credit
Be cautious about co-signing for others—even family. Your credit is ultimately at risk.10. Build Business Credit
Establish business credit separately to help create opportunities for your business. -
❌ The Wrong Credit Mindset
“I don't need credit.”
“Debt is always bad.”
“I never check my credit.”
“I only use cash.”✅ The Right Credit Mindset
“I understand and monitor my credit.”
“I use credit strategically.”
“Responsible debt can help me grow.”
“I use credit to create opportunities—not to overspend.”The goal isn't to avoid credit. The goal is to learn how to use it responsibly.