“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Closing on a house is an exciting time, but it can also be stressful. As you go through the mortgage process, you may be wondering if you need to stop using your credit cards completely until after closing day. Here’s what you need to know about using credit before closing on a home purchase.
How Credit Card Use Impacts Your Mortgage
When you apply for a mortgage lenders will check your credit report and score to assess your creditworthiness. They want to see that you manage credit responsibly. Any significant changes to your credit while in underwriting can make lenders rethink approving your loan.
This is why it’s risky to open a new credit card or department store card account right before closing. The hard inquiry from applying can lower your score, and the new account will reduce your average account age, also potentially dropping your score.
You also want to avoid maxing out cards or letting balances snowball. Carrying high balances compared to your limits known as your credit utilization ratio, can substantially bring down your score.
Lenders calculate your debt-to-income ratio using your monthly debts divided by income. This includes minimum credit card payments. Too high of a DTI can make it harder to get approved or cause you to get a higher mortgage rate.
Using Credit Cards Responsibly Before Closing
The good news is you don’t have to stop using credit altogether when buying a home. However, be cautious with your spending. Follow these tips:
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Only use cards for regular, budgeted purchases. Avoid large transactions you can’t quickly pay off.
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Don’t miss payments on any credit accounts. Set up autopay if it helps you avoid late fees.
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Keep utilization low on each card and overall. Aim for less than 30%.
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Don’t apply for new credit of any kind — credit cards, personal loans, etc.
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Be prepared to explain any new credit inquiries or accounts to your lender.
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Avoid taking out cash advances, which accrue interest immediately.
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Don’t close any existing credit cards as it can lower your total limit.
As long as you stick to responsible credit card habits, your mortgage process doesn’t have to be completely disrupted. Small, everyday purchases won’t normally raise concerns. Just be sure to pay off balances promptly and in full.
If your credit score is borderline, you may need to be extra cautious with card use before closing. Ask your lender if they recommend limiting spending during underwriting.
When to Absolutely Avoid Using Credit
In some situations, ceasing all credit card use in the months before closing is smart:
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If you have bad credit or high debt levels already
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Your DTI is near the lender’s limit
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Your credit score is just above the minimum needed to qualify
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You’ve had issues with credit, like past collections or late payments
Freezing card spending ensures you don’t do anything to jeopardize your home loan approval. You can pick back up once you have the keys in hand.
Plan Ahead to Avoid Credit Surprises
The best way to prevent credit issues from derailing your home purchase is to check your reports and manage debt proactively:
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Review credit reports for errors before mortgage shopping. Dispute any inaccuracies.
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Pay down balances to lower credit utilization.
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Make on-time payments on all accounts.
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Hold off on new accounts once you start the lending process.
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Know exactly what debts will be counted in your DTI.
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Discuss any credit concerns with your lender upfront.
With some planning, you can keep using credit wisely in the months before closing while also getting approved for your dream home. Just be extra diligent about payments and balances. Avoid surprises that could put your mortgage at risk.
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Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
When you’re in the process of getting a mortgage and closing on a house, you’ll want to avoid making any major changes to your finances. That’s because doing so could impact your credit score and your chances of loan approval, potentially derailing your home closing. Here are some tips to help you avoid a closing mishap.
How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
- • Mortgages
- • Loans
Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nations leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com.
- • Homebuying
- • First-time homebuying
Calendar Icon 6 years of experience Laurie Richards is a mortgage editor on Bankrate’s Home Lending team.
- • Credit cards
- • Debt management
Erin Lowry is the author of the four-part Broke Millennial series, including: Broke Millennial, Broke Millennial Takes On Investing, Broke Millennial Talks Money and Broke Millennial Workbook: Take Control and Get Your Financial Life Together.
At Bankrate, we take the accuracy of our content seriously.
“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Their reviews hold us accountable for publishing high-quality and trustworthy content.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Buying a House – When Can I Use My Credit Cards Again? | Questions from Our Home Tribe! #Shorts
FAQ
Can I use my credit card while closing on a house?
While you’re waiting to close on a home, you can still use your credit card, but it’s best to only use it for small purchases and pay off the balance in full. Do not make large purchases you cannot afford to pay off that’ll leave you carrying a significant balance from month to month.
What happens if I use my credit card before the closing date?
Can I use my credit cards while applying for a mortgage?
In short, credit card use can significantly impact your ability to secure a mortgage. Lenders review your credit report and score when you apply for a loan to determine if you’re an acceptable risk. Credit cards can help or hurt this process, depending on how you use them and the amount of your balances.
Can I use my credit card if I’m trying to buy a house?
Mortgage Financing: When you buy a house, you typically need to secure a mortgage. Lenders require proof of your down payment source, and they usually do not accept credit cards as a valid source of funds.
Should you buy a new credit card before a home loan closes?
As you count down the days until your closing, you may be tempted to make big purchases or apply for new cards because you think they won’t affect your credit scores or DTI until after your home loan closes. That thinking could prove risky because real estate closings are often delayed for various reasons.
Are credit cards accepted for mortgage closing costs?
Still, credit cards aren’t usually accepted for mortgage closing costs because mortgage lenders and title companies don’t want to eat the cost of credit card processing fees, which can be significant because closing costs are usually large transactions.
Can a credit card help with closing costs?
Credit cards can help you cover some closing costs, but not many. You might be able to pay a home inspector or appraiser with a credit card, but the mortgage and title companies aren’t likely to accept credit cards. Asking the seller can help you reduce or eliminate paying for the closing costs upfront.
Should I use my credit card when buying a home?
Not exactly. While there are some specific card-related activities you should avoid when buying a home, you can continue to use your cards to make everyday purchases as you normally would.
Should you take out a new credit card before closing?
To that end, try to refrain from making major charges on your credit cards or taking out new credit as it could disrupt the mortgage approval process. Lenders check your credit before closing to ensure your financial situation hasn’t significantly changed since your initial home loan preapproval.
Can I use my credit card if I’m Waiting to close?
While you’re waiting to close on a home, you can still use your credit card, but it’s best to only use it for small purchases and pay off the balance in full. Do not make large purchases you cannot afford to pay off that’ll leave you carrying a significant balance from month to month.