Buying a home involves more than just writing a check. In 2024, approximately 74% of all homebuyers financed their purchases, and according to the National Association of Realtors®, 91% of first-time buyers relied on financing. Before granting a home loan, your chosen lender will evaluate your credibility and reliability by reviewing your credit history.
Here are 5 ways to protect your credit score and improve your chances of securing a mortgage while you're in the process of buying a home:
1. Don’t Finance Any Large Purchases
One of the most important ways to avoid a ding on your credit score when you’re in the middle of buying a home is to avoid making any large purchases.
While it may seem harmless, financing a new TV or couch can actually result in a credit inquiry that could hurt your home loan approval chances. And to be sure, buying furniture for your new home is exciting! But we recommend waiting to finance furniture purchases until after you close, because in some cases, inquiries can temporarily lower your credit score.
And while this may not completely jeopardize your approval odds, it could mean you end up paying a higher mortgage rate if your credit score goes down.
A few of the most common products people purchase with financing include:
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Automobiles
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Home improvement products and projects
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Furniture
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Appliances
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Electronics
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Smartphones
2. Avoid Taking Out Personal Loans or New Lines of Credit
Another common mistake homebuyers make during the purchasing process is taking out personal loans and opening new lines of credit.
Simply put, opening a new credit card or closing a card you own can impact your credit score. A lower score means lenders may be warier about letting you borrow money, which could lead to higher rates or canceling the loan altogether.
3. Stay on Time with All Current Payments
Lenders understand that people applying for home loans have existing credit card bills and other regular payments to make each month. As long as you stay current — meaning you haven’t missed any payments — these are unlikely to negatively impact your credit.
However, missed payments do show up on your credit score. That’s why it’s so important to make sure you have your ducks in a row when it comes to your finances.
Plus, budgeting for a new home includes identifying your disposable income after your credit card obligations, so credit card payments should already be considered in your monthly payment budget.
4. Don’t Change Jobs (if You Can Help it)
Mortgage lenders want to know they’re letting someone trustworthy borrow their money. While changing jobs isn’t necessarily a sign of someone who can’t be trusted, having a consistent employment history signals lenders that you’re reliable.
Of course, being laid off or let go sometimes can’t be helped. In general, though, it’s recommended that if you’re on the home hunt, avoid switching jobs until after you close.
5. Stick to Your Closing Schedule
Closing on a home can be complicated. Lenders expect buyers to fulfill certain obligations to demonstrate their trustworthiness and ability to make regular payments. The first step in this process is sticking to your closing schedule.
Submit paperwork on time and triple-check it for accuracy. Deliver the down payment at the right time. Confirm all important dates with your sales professional and Realtor® to ensure you meet all your obligations on or before they’re due.
Even if you’ve locked in your rate, these locks aren’t permanent, so you could risk delaying or losing your loan.
