Protect Your Home Loan Approval With These Mortgage Credit Do's and Don'ts
Buying a home is one of the biggest financial decisions you'll make, and protecting your credit throughout the mortgage process is essential. Whether you're purchasing your first home or your next home in Hendersonville, Gallatin, Mount Juliet, Franklin, Nashville, or anywhere in Middle Tennessee, the financial decisions you make between mortgage application and closing can have a significant impact on your loan approval.
Even after you've been pre-approved, your lender will continue reviewing your financial profile before closing. A new loan, missed payment, or large unexplained bank deposit could create unnecessary delays or even affect your ability to close on your new home.
Below, Rhonda Holt, my preferred mortgage lender with Lower Mortgage, shares some of the most important mortgage credit do's and don'ts every home buyer should know..
✅ DO Pay Every Bill on Time
Your payment history is one of the biggest factors affecting your credit score. Even one late payment can lower your score and create issues during the mortgage process.
Tip: Set up automatic payments or reminders to ensure you never miss a due date.
✅ DO Keep Credit Card Balances Low
Your credit utilization—the percentage of available credit you're using—has a significant impact on your score.
Aim to keep balances below 30% of your credit limit, and ideally under 10% for the best credit profile.
✅ DO Continue Using Credit Responsibly
It's okay to continue using your existing credit cards for everyday purchases, as long as you pay them as agreed and don't carry large balances.
Consistency demonstrates responsible credit management.
✅ DO Check Your Credit Reports
Review your credit reports before applying for a mortgage to identify any errors or fraudulent accounts.
Correcting inaccuracies early can improve your score and prevent surprises during underwriting.
✅ DO Talk to Your Loan Officer Before Making Financial Changes
Planning to pay off debt? Buy a vehicle? Open a new account?
Always check with your mortgage professional first. What seems like a smart financial move could unintentionally affect your mortgage qualification.
❌ DON'T Open New Credit Accounts
Avoid applying for:
- Credit cards
- Auto loans
- Personal loans
- Furniture financing
- Buy Now, Pay Later programs
Each new account can affect your credit score, debt-to-income ratio, and overall mortgage approval.
❌ DON'T Make Large Purchases
Wait until after closing before purchasing major items like:
- Furniture
- Appliances
- Vehicles
- Electronics
Even if financing is offered with "no interest," the new debt could impact your mortgage approval.
❌ DON'T Close Existing Credit Cards
Closing an account may reduce your available credit and increase your utilization ratio, potentially lowering your credit score.
Unless your lender recommends it, leave existing accounts open.
❌ DON'T Co-Sign for Someone Else
Co-signing makes you legally responsible for the debt—even if you're not making the payments.
That new obligation will likely be included in your debt-to-income calculation which can affect your ability to get a home loan.
❌ DON'T Deposit Large Amounts of Cash Without Documentation
Mortgage lenders must verify where funds come from. Large undocumented deposits or cash transfers can raise questions and delay your loan approval.
If you plan to deposit a significant amount of cash, speak with your lender first so proper documentation can be maintained.
❌ DON'T Accept a Financial Gift without Speaking to Your Lender First!
A financial gift from a family member can be a wonderful way to help with your home purchase, whether it's used for your down payment, closing costs, or other eligible expenses. However, these gifts must be handled correctly. Even well intentioned financial gifts can create unexpected delays if they aren't properly documented.
Before any money changes hands, let your loan officer know. Your lender will explain the documentation that's required, including a gift letter stating that the funds are a gift and not a loan.
It's also important that the funds are transferred using a traceable method, such as a check or wire transfer, so the source of the money can be verified during underwriting.
The best approach is to involve your lender before the gift is made. A quick conversation can help ensure everything is handled properly and keep your home purchase moving forward without unnecessary complications.
The Bottom Line
The period between your mortgage application and closing is not the time to make major financial changes. Continue paying your bills on time, keep your credit balances low, and avoid taking on new debt unless you've first discussed it with your loan officer.
If you're unsure whether a financial decision could affect your mortgage approval, don't guess. Reach out before making a move. A quick conversation today could help prevent delays and keep your home purchase on track.
Buying a home is an exciting milestone, and with a little planning and financial discipline, you can help ensure a smooth path to closing.
If you have questions about preparing for a mortgage or are ready to begin the pre approval process, I'd be happy to help.
About the Author:
Rhonda Holt
Area Sales Manager, Producing Branch Manager
NMLS #771198
Rhonda has helped home buyers throughout Middle Tennessee navigate the mortgage process for over 30 years. She is committed to educating buyers, answering questions, and helping clients understand every step of the financing process from pre approval through closing.
Office: (615) 590-0362
Mobile: (615) 478-5115
Email: rhholt@lower.com
Start your mortgage application online:
A Note From Kim Blanton
I believe having the right lending partner is just as important as finding the right home. That's why I'm pleased to share educational articles from trusted professionals like Rhonda Holt with Lower Mortgage. My goal is to provide buyers with reliable information so they can make confident decisions throughout the home buying process.
If you're considering buying a home in Middle Tennessee, I'd be honored to help guide you from your initial home search through closing and beyond.
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