If you’re thinking of increasing your credit balance or opening a new credit card to prepare for buying a house – you may want to think again.
Taking those actions could cost you credit score points, which means you may get a higher mortgage interest rate than you would have otherwise.
New data from reveals that increasing your balance by $2,000 on an existing card could drop credit scores 68 points or more.
Credit scores decide the difference between a 3.76% interest rate and a 5.35% interest rate, for example. Typically, the higher the credit scores, the lower the mortgage interest rate.
Below is a link to Mortgage Loan Difference Tables compiled by , using an auto loan calculator based on October 11, 2011 mortgage rates. They show how much more a person could pay in total interest on a 30-year fixed loan according to different levels of credit score decline.
Mortgage Rate Differences Table
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