Credit Card FAQ

Do I Need A Credit Card Before A Mortgage?

19 December 2012 by CreditCardsCo™

One of the most important questions that many people ask when they are considering buying a house is whether or not they need a credit card first. There are several benefits to this, but you need to be sure you understand the risks and incentives before you start applying for new credit cards.

It is often a good idea to open a credit card before you apply for a mortgage. Responsible use of your credit card helps to establish a good credit history as well as a competitive credit score. Both of these are particularly beneficial when it comes time to apply for your first mortgage.

Having a credit card has many benefits. One of the biggest benefits to having a credit card, though, might be that it can, in fact, help you to get a mortgage. Alternately, credit cards carry risks that you might not be ready for.

Most financial planners will tell you that it is a good idea to have one or two credit cards for emergencies. They will also tell you that you should use them every so often to show that you are a responsible credit user and thus a good credit risk. Over time this could result in better credit card rates, credit card benefits, and access to bigger credit including mortgages.

Credit Status

When you are thinking of buying a house, you should know that your credit history will determine whether or not you are approved for the account as well as the amount of money you can borrow.

  • No Credit: if you have no credit, it will be virtually impossible to get a mortgage. Usually only younger people have this status
  • Bad Credit: you have had a few problems with paying your credit card bills or loans, which could include a bankruptcy. Getting a mortgage could be very difficult because you are seen as a substantial risk for default or foreclosure
  • Fair Credit: you have a good history of consistent credit payments with possibly some credit increases. It is much easier to get a mortgage with this status
  • Good To Excellent Credit: With either of these statuses it is nearly impossible to be denied credit. Other benefits include better interest rates and even the waiving of fees.

Establishing Good Credit

If you want to establish "Good-To-Excellent Credit" there several things you can do:

  • Use your card sparingly, mostly for emergencies
  • Pay your balances not just minimum payments
  • Make small purchases that are easier to manage

When you use your card sparingly and consistently pay your small balances down you keep your credit ration high. Institutions that can issue credit look at your total credit liability when trying to determine your qualifications. The more you have charged to your card, the more liability you have, and therefore you are a riskier investment.

Improving Your Credit

Whether you need to recover from some credit problems or are strategically trying to raise your credit score there are a couple of things you need to implement into your credit practices.

  • Never overdraft your checking accounts or your credit accounts
  • Pay your bills ahead of the due dates, regardless of what it is: credit cards, rent, cell phone, insurance
  • Avoid extreme credit increases that could expand your credit limit because new credit issuers may shy away from larger loans like a mortgage


In conclusion, do you need a credit card before you get a mortgage? No, but it could probably help establish a healthy credit history. This will be solid foundation for you to make larger credit-based purchases, starting with a home loan.

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