Mortgage lenders look at credit you built over years, but the twelve months before you apply matter most. Here is what to do at each stage, and when to stop touching your credit entirely.
Quick summary
- Pull all three credit reports about a year before you apply; a self-check leaves your scores untouched.
- Payment history makes up about 35 percent of a FICO score and credit utilization about 30 percent, so on-time payments and lower balances are the biggest levers.
- Credit checks from mortgage lenders made inside a 45-day stretch are grouped as one inquiry, so comparing loan offers will not pile up inquiries.
- A corrected Closing Disclosure that changes the APR, the loan product or adds a prepayment penalty restarts a three-business-day waiting period before closing.
- After applying, avoid new credit accounts and financed purchases, since new debt can stall or sink the process even after preapproval.
Buying a home takes months of preparation, and credit is one part you can work on long before you ever talk to a lender. Lenders review your credit history and score to decide whether to approve a mortgage and what terms to offer, so the shape your credit is in when you apply matters. This timeline walks through the year before an application, stage by stage, with what to do at each point and what to have ready.
Twelve Months Out: Pull All Three Credit Reports
Start by reading what lenders will eventually read. Experian, Equifax and TransUnion, the three bureaus that keep credit files on American consumers, each make a free annual report available at annualcreditreport.com, and you can request a fresh copy of each one every 12 months. Looking at your own credit never touches your scores, because a self-check is not handled the way a check from a lender is.
Read each report line by line. Look for accounts you do not recognize, payments marked late that you actually paid on time, balances that look wrong and personal information that is inaccurate. If you find errors, dispute them as soon as possible. The bureaus generally have to look into a dispute and reply, usually within about 30 days, so starting a year out leaves time for disputes to finish before a lender pulls your file. Some late payment entries may be accurate, and there is no quick fix for those; our guide to late payments on your credit report explains how long they last and how recovery works.
Six to Nine Months Out: Pay Down Revolving Balances
Revolving accounts are credit cards and lines of credit where the balance can rise and fall from month to month. The share of your available credit you are using, called your credit utilization ratio, is one of the largest pieces of most credit scores. On-time payment history makes up about 35 percent of a FICO score and utilization about 30 percent, so these two areas deserve the most attention.
A common guideline is to keep each card below 30 percent of its limit, and lower is better; some people aim for under 10 percent. Focus first on the cards with the highest utilization, since that is where reduction tends to help most. If you cannot pay everything down at once, an extra payment mid-month can lower the balance that gets reported to the bureaus. Our article on credit utilization explains how the ratio is calculated and why it can move a score faster than almost anything else.
Two other steps pay off here:
- Set up automatic payments or reminders for every card and loan. A single late payment can undo months of careful work, and late payments land on your credit report, where they can make borrowing harder later on.
- Keep older cards open, even if you rarely use them. Length of credit history makes up about 15 percent of a FICO score, and closing an old card can shorten your average account age. A small recurring charge paid in full each month keeps an unused card active.
Also start thinking about your debt-to-income ratio, which compares your monthly debt payments to your gross monthly income. This figure sits near the top of what a mortgage lender looks at, and paying down card balances and car loans lowers both your utilization and the payments a lender will count against your income.
Three to Six Months Out: Stop Opening New Accounts
New credit accounts for about 10 percent of a FICO score. Each application for a credit card, car loan or store financing usually produces a hard inquiry, which shows up on your credit report and usually costs your scores a few points. Opening new accounts can also shorten your average account age. Our guide to hard vs. soft credit inquiries explains which credit checks affect your score and which do not.
The safest habit is to seek credit only when a real need comes up. In the months before a mortgage application, that means no new credit cards, no store financing and no new loans of any kind. If a current account is unused, leaving it open costs nothing and preserves your history length.
Two to Three Months Out: Keep Your Financial Picture Steady
Lenders ask for documents showing your income and employment, so stability in this window makes everything simpler. A job change does not rule out a mortgage, but it usually means extra paperwork while the lender verifies your new income. If a change is likely, ask your lender early what they will need to see.
Avoid large purchases, especially anything financed. A car loan or furniture financing adds a hard inquiry, new debt and a monthly payment that counts in your debt-to-income ratio. Even after preapproval, new debt can stall the mortgage process or end it altogether. Pay cash where you can and leave your balances where they are.
The Final 60 Days: Paperwork Lenders Will Ask For
Once you are moving toward a formal application, documentation becomes the main task. Common items include:
- Pay stubs covering the last 30 days
- Signed federal tax returns for the last two years
- Deposit account and asset information, including money held at institutions other than your primary bank
- A list of monthly expenses and bills
After the lender receives your written application, it must provide a special information booklet, or a mortgage broker must distribute one, within three business days. If you receive a Loan Estimate, read it closely, since some costs can shift as the lender gets a fuller picture of your finances. Save a copy of everything you submit and everything the lender sends back.
What Happens to Your Score During Rate Shopping
This is the part readers worry about most, and the rules are more forgiving than most people expect. When several mortgage lenders check your credit inside a 45-day stretch, the reporting companies group those checks together and count them as one inquiry, because lenders know you will buy only one home. Checking with two lenders or with five produces the same effect, as long as the last credit check falls within 45 days of the first. You can collect multiple preapprovals and compare Loan Estimates without stacking inquiries.
If a lender pulls your credit once those 45 days have passed, the added inquiry still has only a small effect, and shopping around is usually still worth it because comparing offers can save you a lot of money over the life of the loan. Looking at your own credit or your own scores, at any point in the process, still has no effect.
What Not to Do After Your Application Is In
The stretch between application and closing is when careful habits matter most.
- Do not apply for new credit. A store card opened to buy appliances is still an inquiry and still new debt.
- Do not make large financed purchases or move money in ways you cannot explain. Lenders may ask about new deposits and new obligations before closing.
- Do not ignore revised forms. If a corrected Closing Disclosure makes the APR inaccurate, changes the loan product or adds a prepayment penalty, the lender must provide it at least three business days before closing and the waiting period starts over. For most other changes, the corrected disclosure can arrive at or before closing.
- Stay alert to fraud. In the last days before closing, scammers send emails that pretend to carry wire instructions and try to divert down payment and closing cost money.
Red flag: If an email arrives with new wire instructions days before closing, do not act on it. Call the title company or lender at a number you look up yourself and confirm the details before sending anything.
Related guides
- What Counts as a Good Credit Score? explains the score ranges lenders generally see and what they mean for loan terms.
- How Mortgage Underwriting Works, Step by Step covers what happens to your file after the application is submitted.
- Debt-to-Income Ratio: How Lenders Measure Your Debt Load breaks down the figure lenders use alongside your score.
Reader questions
Q: Does getting preapproved by several lenders hurt my credit?
A: Not in the way most people expect. When mortgage lenders check your credit inside a 45-day stretch, those checks are grouped as a single inquiry, so the effect is the same whether you talk to two lenders or five.
Q: Can checking my own credit report lower my score?
A: No. A self-check is not treated the way a lender’s check is, so reviewing your own report or scores has no effect on your credit.
Q: How much should I pay down my credit cards before applying?
A: A common guideline is to get each card below 30 percent of its limit, and lower is better. Focusing on the cards with the highest utilization first tends to help scores the most.
Q: What happens if the loan terms change before closing?
A: For most changes, the lender can give you a corrected Closing Disclosure at or before closing. But if the change makes the APR inaccurate, changes the loan product or adds a prepayment penalty, you must receive the corrected disclosure at least three business days before closing.
This article is general information, not financial or legal advice. Scoring models, lender policies and laws change, and state rules vary. Check official sources such as the Consumer Financial Protection Bureau and the Federal Trade Commission, and consider a nonprofit credit counselor for help with your own situation.