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Credit Check Mortgage

I pre-qualified for a mortgage. Will my bank do a second credit check just before closing?

I am trying to buy a house and they have already pulled my credit in Feb. and I should close in April will they have to run my credit again? Also I have been using my credit cards after they pulled the credit but also been paying on time. Now my question is if they do pull my credit and I had paid off the cards at the beginning of April when will it be updated to my credit report?

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Bill's Answer
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Updated: Oct 23, 2014

Bills.com | Find Learn Save

The answer to your question is "maybe."

It appears you were pre-qualified for a loan from either a mortgage broker or a direct lender. In the pre-qualification process, the broker or lender did a "hard pull" credit check on your credit report, and apparently was satisfied with what it found.

Time has passed, you are concerned that your financial activity may have a negative impact on your credit score, and want to know if the bank servicing your mortgage will do another credit check to review your credit score. As I mentioned, the answer to this question is maybe, and the answer depends on two factors.

The first is the amount of time that has passed. If more than 90 days passes between the pre-qualification and the closing (and funding) of the sale, then it is probable that the bank will conduct a credit check again.

The second factor that may determine whether your credit report will be pulled is the policy of the bank. Some do a second credit check of all applicants before funding as a matter of course. Others follow the 90-day rule I mentioned. Whether your bank does a credit check again is really up to your bank.

It would be in your best interest if you can control the timing of credit card purchases until after the closing so that your credit report does not suffer any drop.

Readers who are interested in applying for a mortgage but have not started the process may wish to read the remainder of my answer.

Qualifying for a Mortgage

Banks want four things in a perfect mortgage borrower: 1) Stable income; 2) Attractive credit history; 3) Low debt-to-income ratio; 4) Big down-payment. If a customer is lacking in any one (or more) of these, said customer will have a difficult time getting a loan.

Start with Mortgage Basics to Know Before You Apply for a Loan. Next, I recommend you download a Uniform Residential Loan Application (Form 1003), complete it, and resume your mortgage shopping. Then, go to the Bills.com mortgage saving center for no-cost, pre-screened quotes from mortgage lenders.

Credit Report

Next, go to AnnualCreditReport.com to get a no-cost, no-obligation copy of your credit report from each of the three major consumer credit reporting companies (commonly called "credit bureaus"). Review your report and dispute any inaccurate listings.

To find out more how your credit score is calculated I recommend you read an article I wrote explaining FICO Score Calculation. This should give you a much clearer understanding of how credit scores work.

Debt-to-Income Ratio

Finally, lenders calculate and analyze your debt-to-income ratio to determine the size mortgage you can afford. See DTI: Debt-to-Income Ratio Information to learn how to calculate your debt-to-income ratio.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/