Your credit plays an important role in the mortgage process. Lenders review your credit history and scores to help determine your eligibility, loan options, and the interest rate you may qualify for.
Whether you're just starting to explore homeownership or you've already applied for a mortgage, a few smart credit habits can help you stay on track. Here are some important do’s and don’ts to keep in mind.
Credit Do’s
Credit Do’s
DO make every payment on time
Your payment history is an important part of your credit profile. Continue making at least the minimum payments on your credit cards, auto loans, student loans, and other accounts by their due dates. Even one late payment can affect your credit.
Consider setting up automatic payments or reminders so nothing slips through the cracks.
DO keep your credit card balances manageable
How much of your available credit you're using can affect your credit scores. Try to keep balances comfortably below your credit limits, and avoid making large purchases that increase your debt.
If you're able to pay down balances, talk with your loan officer about the best approach while your mortgage application is in progress.
DO check your credit reports
Reviewing your credit before applying for a mortgage can help you identify errors, unfamiliar accounts, or other issues that may need attention.
You can access free credit reports from all three major credit bureaus through AnnualCreditReport.com. Checking your own credit report does not hurt your credit scores.
If you find an error, take steps to dispute it and let your loan officer know. Addressing issues early can help avoid unnecessary surprises later.
DO stay in touch with your loan officer
Have a question about paying off a credit card, handling an old collection account, or making another financial move? Check with your loan officer before taking action.
A change that seems helpful on the surface could affect your credit profile, debt-to-income ratio, or loan approval. Your loan officer can help you understand how a decision may affect your specific situation.
Credit Don’ts
DON’T apply for new credit
Avoid opening new credit cards, financing furniture or appliances, or taking out an auto loan while preparing for a mortgage or going through the approval process.
New credit applications can result in hard inquiries, and additional debt may affect your credit scores and debt-to-income ratio. If you need to make a major purchase, talk with your loan officer first.
DON’T make large purchases on your credit cards
It can be tempting to start buying furniture, appliances, or other items for your future home before closing. However, large purchases can increase your balances and monthly debt obligations.
It's best to wait until after closing before taking on new expenses.
DON’T close credit card accounts without checking first
Closing an established credit card account can affect your credit utilization and the length of your credit history. Even if you're trying to simplify your finances, closing an account during the mortgage process may have unintended consequences.
Talk with your loan officer before closing accounts or making significant changes to your existing credit.
DON’T co-sign for someone else's loan
Co-signing makes you responsible for the debt if the primary borrower doesn't make payments. That obligation may be considered when a lender evaluates your finances, even if you don't expect to make the payments yourself.
It's best to avoid taking on new financial responsibilities while your mortgage application is being reviewed.
DON’T make major credit or financial changes without guidance
Paying off collection accounts, consolidating debt, transferring balances, or making other significant changes can affect your credit and mortgage application in different ways.
There isn't one rule that applies to every borrower. Before making a move, check with your loan officer so you can understand the potential impact and determine the best next step.
Keep Your Mortgage Moving in the Right Direction
A little extra attention to your credit can go a long way during the mortgage process. Continue paying your bills on time, keep balances manageable, and avoid unnecessary changes to your finances.
Most importantly, stay in communication with your loan officer. If you're unsure whether a financial decision could affect your mortgage, ask before making it.
Thinking about buying a home? Connect with an Embrace Home Loans loan officer to discuss your goals, understand your mortgage options, and take the next step with confidence.
Credit scores are one of several factors lenders consider when evaluating a mortgage application. Loan eligibility, terms, and interest rates depend on a borrower's overall financial profile and applicable loan requirements.
