By Hanh Dao, Branch Manager, Lock It Lending. NMLS #1406378.

Educational content only. This is general information, not advice about your specific situation, and nothing here guarantees a particular credit score, loan approval, or interest rate. Individual results differ. Scoring models and lender requirements both vary. For your own file, talk to a licensed mortgage professional or a HUD-approved housing counselor.

The Mistake I See Almost Every Week

A client tells me they paid off their credit card. They did. Then I pull credit and the balance is still sitting there.

They paid on the due date. By then the balance had already been reported.

Most card issuers report your balance as of the statement closing date, not the day you pay. Say your statement period runs from January 11 through February 10, and your payment is due March 5. If you carry $4,000 on a $5,000 limit through February 10 and pay it off on March 5, your report can still show $4,000. Pay it before February 10 and a much smaller balance may be reported. Same money, different timing, different number on your credit report.

Your closing date is on your monthly statement and in your online account. It isn't always two weeks ahead of the due date, so check yours instead of guessing.

Sample credit-card statement highlighting a January 11 through February 10 statement period and a March 5 payment due date — Your statement period and payment due date are usually shown near the top of the statement. Check both.

A Real Example

One borrower came to me carrying two store cards. About $400 on a $500 Macy's line, and $200 on a $300 Express line. Small limits, both close to maxed.

They paid each card down to a $50 balance. Their score went up about 60 points.

I want to be careful here, because this is where people hear a number and start expecting it. That was one borrower's file, and yours will be different. It moved that much because of the specific setup. Both limits were small and both cards were nearly full, so reported utilization went from roughly 75% across the two down to about 12%. Someone carrying those same dollars on a $20,000 limit would not see anything close to that, because their utilization was never high to begin with.

Here is what mattered: both cards had small limits and both were almost full. Also notice that the borrower did not stop at 30%.

Thirty percent is not a magic cutoff. Lower balances generally help, but the scoring companies do not publish one exact threshold. The CFPB's guidance is to keep balances low compared with your available credit. I would rather show you what matters in your actual file than give you a made-up target.

The article's two-card example showing combined utilization changing from about 75 percent before paydown to about 12 percent afterward — The dollar amounts are the same example explained above. The score change was specific to that borrower.

The Score You're Checking Isn't the One I Pull

Borrowers tell me all the time that their bank app or Credit Karma says 750. Then I pull, and it comes back lower. The first thing they ask is whether my pull did that.

It didn't. One mortgage inquiry is not what moved it. The number is different because mortgage uses different scoring models than the free apps do.

Mortgage lending still runs largely on older FICO models, pulled from all three bureaus at once, and the lender works from the middle of the three. Not the highest, and not the average. The free apps generally show you something newer. Same person, same credit, different model, different number.

The models are in transition as I write this. The FHFA has approved VantageScore 4.0 as an option for Fannie Mae and Freddie Mac loans, with FICO 10T expected to follow, and the three-bureau requirement stays in place. Most files I see still close on classic FICO.

So don't build your plan around the app number. And if there are two of you on the loan, which score applies is a different rule again. Ask before you assume.

Example bureau scores of 720, 700, and 680 with 700 highlighted as the middle score used for a mortgage review — For one borrower, mortgage lending typically reviews all three bureaus and uses the middle score—not the highest or the average.

When I Start With a Soft Pull

Most people know about a hard pull and worry that it will hurt their score. A soft pull gives us another way to start.

I can run a soft pull on a single bureau. It shows me your credit and your balances, and it does not report a hard inquiry, so it does not affect your score. That's a useful way to see where you stand before you're ready to commit to anything.

The limitation is coverage. One bureau does not always show everything. A single-bureau soft pull can miss an installment loan, and that debt can change what you qualify for when the full file comes in. A soft pull across all three bureaus gives more information, but it costs about as much as a hard pull.

My advice: use a soft pull as a good first look, but not as the final answer. One bureau may not show the whole picture.

Shopping Lenders? Keep the Credit Pulls Close Together

You've probably read that multiple mortgage inquiries in a short window get counted as one, so shopping around doesn't stack up against you. That's generally true. What most articles miss is that the window they quote is probably too long for you.

Newer FICO versions allow a 45-day rate-shopping window. Older versions allow 14. Because mortgage lending still uses many of the older models, I tell borrowers to finish their lender shopping within about two weeks.

If another lender pulled your credit a few days ago, my pull is usually very close unless something else in your credit file changed. Shopping in a short period should not be what stops you from comparing lenders.

Here Is the Order I Recommend

Three to six months out

Pull all three reports free at AnnualCreditReport.com. Checking your own credit is a soft inquiry and does not affect your score.
Dispute anything genuinely inaccurate. It's free, and disputes take time, so start here.
Get current on every account and stay current.
Start paying balances down before the statement closes, and give the small-limit cards attention first.

Sixty days out

No new accounts. No cards, no financed furniture, no buy-now-pay-later.
Don't close old cards. That shrinks your available credit and pushes utilization up.

Under contract

Change nothing. Credit usually gets re-checked right before closing.
If something does change, tell me before I find it.

If You've Already Paid It Down

The bureaus update on their own schedule, so a payment you made this week might not show for weeks. When timing matters inside a live loan, a lender can request a faster update. It's called a rapid rescore.

Let me be straight about what it is. Your lender requests it, not you. It may carry a per-file, per-bureau fee. And it only speeds up the reporting of information that is already true. It does not raise your score by itself, it does not remove anything, and it does not skip verification. If it's relevant to your file, ask whether it's available and what it costs.

Three Situations That Come Up a Lot

Thin or no credit file. Becoming an authorized user on someone else's long-standing, never-late account can help in some scoring models. It cuts both ways. Their high balance or missed payment can land on your report too, not every issuer reports authorized-user activity, and not every model treats it the same. Talk to the cardholder first.

Collections. Verify the debt is yours and the amount is right before paying anything. If it's inaccurate, dispute it free with the bureau and with the company reporting it. If it's accurate, get any repayment or settlement terms in writing before you pay, and keep the copy. Paying does not erase the account's history, and the effect on your reports and scores varies. Be skeptical of anyone who promises to delete accurate information for a fee. The FTC has warned about that for years.

Past bankruptcy or foreclosure. It doesn't rule you out. It usually means a waiting period, and every program sets its own. For conventional loans, Fannie Mae's Selling Guide sets 4 years from a Chapter 7 discharge or dismissal and 7 years from a completed foreclosure, with shorter windows in documented extenuating circumstances. FHA, VA and USDA follow separate rules. Give me your dates and I'll tell you where you actually stand.

My Advice

I keep credit conversations simple. I explain what I see, which items matter for the mortgage, and what to do first.

Most borrowers do not need a twelve-step credit plan. They need to know which two or three things matter for their situation and when to handle them. If your credit is complicated enough that you want independent help, a HUD-approved housing counselor can work through it with you, often at little or no cost. Confirm any fee with the agency first. Lock It Lending does not provide credit-repair services.

If you want a second set of eyes before you apply, reach out. You can also look at loan program options or run your numbers through the affordability calculator.

Improve Your Credit Score Before a Mortgage