Credit Myths: Debunked

Your credit score plays a major role in determining whether you’ll be approved for a mortgage and what loan terms you’ll receive. Unfortunately, misinformation about credit can lead to unnecessary stress and poor financial decisions during your home-buying journey. Let’s clear up some common myths so you can move forward with confidence!

Myth #1: Student Loan Debt Will Prevent You from Getting a Mortgage

Many believe that having student loan debt automatically disqualifies them from homeownership. In reality, student loans are just one factor in the mortgage approval process. Lenders look at your debt-to-income (DTI) ratio, which compares your total monthly debt payments to your income. As long as you manage your student loans responsibly and maintain a reasonable DTI, homeownership is still within reach!

Myth #2: Checking Your Credit Score Lowers It

Some people avoid checking their credit because they fear it will hurt their score. The truth? Checking your own credit is considered a “soft inquiry” and has zero impact on your score. In fact, monitoring your credit regularly is a great way to catch potential issues early. On the other hand, a “hard inquiry”—such as when applying for a mortgage—can cause a small, temporary dip in your score, but this is normal and expected.

Myth #3: You Need a Perfect Credit Score to Qualify for a Mortgage

You don’t need an 800+ credit score to buy a home! While a higher score may help you secure better loan terms, some loan programs allow for as low as a 580 score. If you’re not sure where you stand, connect with an STM loan officer to explore your options and see what’s possible.

Myth #4: Closing Old Credit Cards Boosts Your Score

It may seem logical to close unused credit cards, but doing so can actually hurt your credit score. One key factor in credit scoring is the length of your credit history. Closing older accounts can shorten your average credit age and reduce your available credit, which may lower your score. If a card has no annual fee, it’s often best to keep it open to maintain a strong credit profile.

Myth #5: Paying Off Your Credit Card in Full Every Month Is the Only Way to Build Credit

Paying your balance in full each month is a smart financial habit, but it’s not the only way to improve your credit. The key factor is credit utilization, which refers to how much of your available credit you’re using. Ideally, you should keep this below 30%. Even if you carry a small balance, as long as you make on-time payments, your credit score can still thrive.

At Southern Trust Mortgage, we know that navigating credit and mortgage financing can feel overwhelming—but you don’t have to do it alone. Our team is here to provide expert guidance and personalized solutions to help you achieve homeownership.

Ready to make home happen?

Contact your trusted STM Loan Officer today, and let’s unlock the door to your new home—together!