When you’re buried under credit card debt, or lack any credit at all, it might be hard to consider purchasing a home. Here are some things to consider when it comes to credit card debt and applying for a mortgage.

Credit Card Debt

The amount of credit card debt you have will affect the mortgage loan rate you receive from a bank. A loan officer wants to know you are able to pay down loans.

If you’re able to get a loan depends on your credit history, which is the largest contributing factor to your credit history. If you’ve defaulted on credit card debt in the past, you might have a hard time securing a home loan.

Managing Credit Card Debt

There are numerous ways to get a handle on credit card debt.

You might want to consider loan consolidation to get your debt down. You can transfer balances from high0interest credit cards to the lower cards. Be wary of any fees that are tacked on for doing these balance transfers. Continue to pay minimum fees while focusing on the credit card that has the highest interest rate. Lastly, and it’s hard advice to hear, but consider cutting down on your spending. Maybe you don’t need that “every-morning latte.”

No Credit

According to a study done by Bankrate.com, 35 percent of adults over 30 have credit cards. But 63% of people aged 18 to 29 do not have a credit card, and thus, no credit.

But there are ways to get a mortgage loan without credit, such as government-backed mortgages, or FHA loans. Both of these were designed for low income, first-time homebuyers. You’ll still need to prove you are able to pay debt in a timely manner. You can also see if you can get a co-signer. Another option is to wait a little bit while you establish credit. The trick to establishing good credit is to keep the balance at less than 25% of the card’s limit and pay it off monthly in full.

Source: Forbes,What To Do About Debt When Applying For A Mortgage, November 3, 2014