Which action can help borrowers improve their credit score before filing for a mortgage?

Paying down debts and correcting inaccuracies on credit reports is the most effective action for borrowers looking to improve their credit score before applying for a mortgage. Reducing debt has a direct impact on the credit utilization ratio, which is a significant factor in credit scoring. A lower balance on credit cards relative to their limits can lead to a better credit score. Additionally, ensuring that credit reports are accurate by disputing any errors or discrepancies can prevent unjustly low scores that stem from incorrect information. As borrowers manage their debts responsibly and rectify inaccuracies, they demonstrate their creditworthiness, making them more attractive to lenders.

Other actions, such as applying for multiple credit cards or closing old accounts, can have adverse effects on credit scores. Opening new credit lines may lead to hard inquiries, which can temporarily reduce scores, while closing old accounts can shorten credit histories, impacting the length of credit history, another important factor in credit scoring. Reducing savings does not contribute positively to credit scores and is not beneficial in preparing for a mortgage application.