Your Credit Card Paying Habits Can Affect Your Chances of Buying a Home

Posted by Staff Reporter ( on May 05, 2016 06:10 AM EDT
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SAN FRANCISCO - FEBRUARY 25: Visa credit cards are arranged on a desk February 25, 2008 in San Francisco, California. Visa Inc. is hoping that its initial public offering could raise up to $19 billion and becoming the largest IPO in U.S. history. (Photo : Justin Sullivan/Getty Images)

The entire process of buying a home - from looking for one to sealing the deal - is a long and tedious one. While having a good credit score is definitely a must if you want to apply for a mortgage, a recent report shows that your credit card bills may also affect your chances of getting an approved mortgage application.

A good credit score is one of the most important requirements when applying for a home loan. As previously reported here on Realty Today, having a credit card and paying your bills on your card on time can help you gain better credit.

However, a recent update on Fannie Mae's automated underwriting system shows that paying your bills on time will not be the sole factor in determining your financial health. According to, the recent changes dictate that the lender will use trended credit data to dig deeper into the applicant's financial capability.

This means that Fannie Mae will check on the applicant's actual payment amount on the specified credit card account for the past two years. This process would then classify the applicants into two categories: the "transactors" and the "revolvers."

According to the publication, the "transactors" are those who pay their bills on time and in full amount each month. The "revolvers," on the other hand, are those who pay the minimum each month and those who do balance transfers on their debt.

The "transactors" would have no problem with the said updates in Fannie Mae's automated underwriting system. The same could not be said for the "revolvers," though.

The publication notes that revolvers can still get an approved mortgage application despite this recent update. However, there are things that you will need to prepare yourself for. For example, you may be asked to buy a cheaper house or pay off the obligations through closing.

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