Credit Moves to Make in the 90 Days Before You Apply

Your credit affects which loans you qualify for and what they cost. The good news: three months of focused habits can make a real difference. Here's how mortgage lenders read your credit, and a 90-day plan for getting it ready.

First, know how lenders read your credit#

• Lenders pull all three bureaus (Equifax, Experian and TransUnion) and use your middle score. If only two scores come back, they use the lower one.
• With two buyers, the lower person usually sets the price. Each of you gets a middle score, and the loan is generally priced on the lower of the two. Fannie Mae uses the average of the two middle scores for some eligibility checks, but pricing still follows the lower one.
• The score in your app probably isn't your mortgage score. Mortgage lenders use specific scoring models. Use free apps to watch the trend, not as the exact number a lender will see.
• Your reports are free. AnnualCreditReport.com offers free weekly reports from all three bureaus. That's the official site; you don't need a paid service.

Days 1–30: Find and fix problems#

• Pull all three reports and read every account. Look for accounts you don't recognize, late payments you made on time, wrong balances and old addresses.
• Dispute errors directly with the bureau that shows them. Disputes are free. Keep copies of what you send.
• Set every account to autopay at least the minimum. A recent late payment, especially on rent, a car loan or a card, is one of the hardest things to explain to an underwriter.
• List every card with its balance, limit and statement closing date. You'll need the closing dates next month.

Days 31–60: Lower your reported balances#

• Pay before the statement closes, not just by the due date. The balance on your statement is the one that gets reported to the bureaus. Paying it down a few days before the statement closes lowers your reported usage, even if you pay in full every month.
• Work usage down in steps. Get each card under 30% of its limit, then under 10% if you can. Lower reported usage generally helps. The free credit card paydown planner works out how much to pay on each card, and by what date.
• Don't close old cards. They add to your credit history and your total available limit. Closing one can raise your usage overnight.
• Ask before paying off old collections. Paying an old collection doesn't always help your score, and the cash may matter more at closing. A lender can tell you which payoffs actually change your approval.

Days 61–90: Hold steady#

• No new credit. Skip the store-card discount, the car loan and the furniture financing. Each new account adds an inquiry and a payment, and the payment counts against what you can borrow.
• Don't co-sign for anyone. Their loan counts as your debt.
• Don't drain your savings to pay off every debt. You'll need cash for closing and reserves. Talk to a lender first.
• Keep your cash in the bank. Money kept at home can't be documented, so lenders can't count it. If you have cash at home, deposit it early.

Your 90-day checklist

A few things that help more than people expect#

• Medical debt. The three bureaus no longer report paid medical collections, or medical collections under $500. If one is on your report, dispute it.
• Authorized-user accounts. Being an authorized user on someone else's card can show up on your report, good or bad. If that account carries a high balance or late payments, ask to be removed.
• Rent history. On-time rent paid from your own bank account is evidence lenders and programs like NACA can use, so pay it electronically if you can.

If you're going the NACA route#

NACA doesn't use a credit score to approve you. It looks at your payment history instead, and it doesn't weigh every late payment the same. Late mortgage and rent payments count the most, then child support, taxes and car payments, with medical debt and utilities near the bottom. NACA's workbook says collections older than 24 months rarely have to be paid off, except taxes, federal student loans and child support. The same 90-day habits still apply: pay on time, document everything and open nothing new.

Shopping lenders won't wreck your score#

When you're ready, compare at least two or three lenders. According to the CFPB, mortgage credit checks within 45 days of each other count as a single inquiry, so you can shop without extra damage. Some lenders pre-approve on a soft pull and only do a hard pull once you're under contract, so ask.

The bottom line#

Pay on time, pay before the statement date, open nothing new, and talk to a lender before making big moves. Ninety days of steady habits can open up more options and better terms.

Credit scoring and lender requirements vary by loan program and lender. A lender can review your specific situation.