Credit, and What Actually Matters

Credit is the part of the mortgage process people worry about most and understand least, and relocating buyers have a particular exposure: a move involves exactly the activities that disrupt a credit file at exactly the wrong moment. Here's what matters and what to leave alone.

The short answer

Lenders look at your score, your history, and your debt relative to income. Check your reports early, fix errors, and then change nothing until you've closed.

What lenders are actually looking at

Credit score, which affects whether you qualify and on what terms. Different programs have different thresholds and lenders may add their own requirements.

Payment history. Whether you pay on time. Generally the heaviest factor.

How much of your available credit you're using. High balances relative to limits can affect your score even when you're paying on time.

Length of history.

Recent inquiries and new accounts.

Debt relative to income. Your total monthly obligations against your gross monthly income. This is separate from your score and it's frequently what actually constrains how much you can borrow.

Derogatory items — collections, judgments, bankruptcies, foreclosures. Programs handle these differently and waiting periods may apply. If any apply to you, raise it in the first lender conversation. They're frequently workable and they need planning.

Start by looking

Pull your reports from all three bureaus before you talk to a lender. You're entitled to free copies — the federally authorised source is annualcreditreport.com.

Look for errors. They're more common than people expect: accounts that aren't yours, wrong balances, items that should have aged off, a paid account showing open.

Dispute errors early. Corrections take time, and discovering one at week three of a contract is painful.

If you're married or buying jointly, both of you pull reports. Lenders look at both.

What not to do, from first conversation to funding

This list is short and it matters enormously.

Don't open new credit. Not a store card, not a furniture account, not a car loan. New accounts change your profile and can affect your approval.

Don't close old accounts. It can affect your utilisation and history.

Don't make large purchases on credit.

Don't move money between accounts without telling your lender. Unexplained deposits and transfers create underwriting problems, and the fix is documentation you could have prepared.

Don't take cash deposits without documenting the source.

Don't change jobs if you can avoid it. If you must, tell your lender immediately.

Don't co-sign anything.

Don't pay off collections or close accounts without asking your lender first. This surprises people — sometimes it helps, sometimes it doesn't, and sometimes the timing causes problems. Ask before acting.

The rule: be financially boring until you've closed. Your file gets re-checked near closing, and changes found then can stop a funding on the day.

The relocation-specific traps

These catch relocating buyers specifically.

Furnishing the new house before closing. You're moving into more space, the furniture store offers financing, and it's the most natural thing in the world. It can also affect your approval. Wait.

A new vehicle. Common when a household realises they need another car in a driving region. Wait until after closing.

Relocation reimbursements and signing bonuses arriving as deposits. Tell your lender in advance so they're documented rather than queried.

Breaking a lease or carrying two housing payments, which affects your debt-to-income picture. Raise it early.

Closing accounts in your old state — utilities, a local bank. Generally harmless, but ask if any involve credit.

Improving your position before you start

If you're not buying immediately:

Pay down revolving balances, which can move a score relatively quickly.

Keep everything current.

Don't open anything new in the months before applying.

Correct errors.

Ask a lender what would move the needle for your specific file. Many will tell you plainly, and it's a better use of your time than general advice.

What this looks like in Spring

One practical note. Spring has a wide range of price points, and relocating buyers frequently find their budget reaches further here than where they came from.

That's genuinely good, and it's also where the furniture-financing trap lives — a larger home needs furnishing, and the offers are everywhere. Build furnishing into your cash plan and buy it after closing, not before.

Questions I get about this

What score do I need?

It varies by program and lender and it changes. Ask a lender what applies to your situation rather than working from a number you read somewhere.

Will checking my own credit hurt my score?

Checking your own reports doesn't. Ask your lender about how mortgage inquiries are treated.

Should I pay off my car before applying?

Ask your lender first. It affects debt-to-income and cash reserves in different directions and the answer is situational.

This article is general information. It is not lending, credit, or financial advice, and I am not a licensed loan officer or credit counsellor. Requirements vary and change — consult a licensed lender.

Where I'd leave you

Pull all three reports before you talk to a lender, fix errors early, and then change nothing — including the furniture — until you've closed.