Credit Do's and Don'ts
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Credit Do's and Don'ts
Do
Things that keep your approval on track
Payment history is the single biggest factor in your credit score. One missed or late payment during the loan process can lower your score enough to affect your rate — or your approval.
Keep every account — credit cards, auto loans, student loans — in good standing. Accounts that go delinquent or enter collections are a red flag that can stop a closing in its tracks.
Your lender needs to verify you have the funds for your down payment and closing costs. Avoid draining accounts or moving money around unnecessarily — it creates paperwork and raises questions.
If you're unsure whether something will affect your loan, ask first. Your dedicated PHS loan officer can tell you exactly what documentation will be needed and whether to wait until after closing.
When your loan officer or underwriter asks for a document, respond the same day if possible. Delays in documentation are the most common reason closings get pushed back.
Stay with your current employer through closing. Your lender will verify employment right before the loan funds — stability signals that your income is reliable and the approval stands.
Don't
Actions that can delay or derail your closing
Every new credit application triggers a hard inquiry that lowers your score. New credit cards, auto loans, store credit — even zero-balance accounts — create new debt obligations that change your debt-to-income ratio.
Furniture, appliances, a car — anything that adds to your monthly debt load can push your DTI ratio over the limit and cost you the loan. If you need to make a large purchase, pay cash and talk to your loan officer first.
Even a raise or a promotion to a better company can complicate underwriting. Changing from W2 to self-employment, switching to commission, or any gap in employment will require a full re-underwrite and may delay closing.
Lenders must source every dollar used for your down payment and closing costs. Cash deposits that can't be traced to payroll, tax returns, or documented gifts will require written explanations and can hold up your closing.
It seems logical to simplify your finances before closing, but closing accounts reduces your total available credit and raises your utilization ratio — both of which lower your score. Leave existing accounts open until after you close.
Co-signing makes you legally responsible for that debt. Even if you never make a payment, the lender counts it against your debt-to-income ratio. Wait until your mortgage has closed before co-signing for anyone.
Your Approval Isn't Final Until Closing Day
Your lender pulls your credit again right before funding. Any new accounts, inquiries, or score drops discovered at that stage can change your rate, require new documentation, or — in the worst case — result in a denial the day before closing.
Debt-to-income ratio is reassessed using your current debts at the time of closing — not when you applied. A new car payment or credit card added midway through the process can flip a qualifying ratio to a failing one.
Payment history accounts for 35% of your FICO score. Even one 30-day late payment reported during the loan process can drop your score below the minimum threshold — which means starting over with a new application and a new rate lock.