Credit Tip for Homebuyers: Don’t Make This Common Mistake

As a real estate professional, your clients rely on you for more than just finding the right home — they trust you to guide them through the entire process. 

One area where even the most well-intentioned buyers can unknowingly sabotage their progress is with their credit score. Here’s a smart tip you can share with every new homebuyer:
Closing a paid-off credit card might feel like a win, but it can actually hurt their credit.

❌ Why Closing a Credit Card Can Backfire

Even if a card is fully paid off, closing it can negatively affect three key components of a buyer’s credit score:

1. It Lowers Their Total Available Credit

Credit utilization (how much credit they’re using compared to what’s available) makes up 30% of a credit score.
👉 Closing a card reduces available credit and can spike their utilization rate — which lowers their score.

2. It Can Shorten Credit History

The age of accounts matters. That old credit card? It’s actually helping build their score.
👉 Closing it might decrease the average age of their credit — not good.

3. It Affects Credit Mix

Lenders like to see different types of credit (installment loans, credit cards, etc.).
👉 Removing a card can narrow their credit profile and reduce this mix.

🛑 Exception to the Rule

If the card has a high annual fee and provides no real benefit, wait until after the home closes to cancel — or ask the bank for a no-fee downgrade to keep the account open.