Leave Your Credit Alone While Buying A House

It’s a potentially fatal mistake. A homebuyer applies for a mortgage, gets pre-approved based on their credit score, among other things, and then goes and has a contract to buy a house. While the buyer is under contract, they get excited, right? They need new furniture and stuff for their new house, so they start shopping. They go to a store that offers them a discount or financing for opening up a store card. BIG MISTAKE.

Most people do not know that their credit is checked again right before closing. That credit check the lender does to pre-approve you is not the only credit check that happens during the home-buying process. Lenders will do another credit check anywhere from a week to right before your closing, to make sure there have been no significant changes to your credit score. So when you go out and charge up your credit cards with new stuff for your house, or open up a new credit card or worse, buy a new car to go with your new house, you could be tanking your home purchase.

I’ve had this happen to clients before, with not-so-good to disastrous results. One client’s credit score dropped just enough to raise their rate. They still bought the house, but at a higher rate and payment than they had originally thought. Another client’s score dropped so much they disqualified themselves from being able to get the loan for their home. So all that new furniture they bought? Now they don’t have a new house to put it in. Talk about a disappointment.

Don’t do anything with your credit. Don’t close accounts, either. That can also have a temporarily bad effect on your credit as well. Before you do anything, ask your lender whether it’s ok to do so. Otherwise you may find yourself without your new home.