How soon can you apply for credit after closing on a new home? Making changes to your credit before closing can cause delays or problems in your closing process, but even after closing, it’s crucial to know how applying for new credit impacts your credit history as a whole. This is especially true if you recently bought a property and are considering getting a credit card.
Congratulations on closing on your new home! Now that you’re settled in, you might be wondering if it’s safe to apply for new credit. After all, you don’t want to jeopardize your hard-earned mortgage by making any unnecessary moves.
The good news is that lenders typically won’t pull your credit again after closing However, there are a few exceptions to this rule. Let’s take a closer look at when lenders might pull your credit after closing and what you can do to protect your credit score.
When Lenders Might Pull Your Credit After Closing
In most cases, lenders will only pull your credit once during the mortgage process: before you apply for the loan This is because they need to assess your creditworthiness to determine whether you’re a good candidate for the loan.
However, there are a few situations in which lenders might pull your credit again after closing. These include:
- If you make significant changes to your credit: If you open new credit accounts, close existing accounts, or take on a lot of new debt, your lender may pull your credit again to see how these changes have affected your creditworthiness.
- If you’re late on your mortgage payments: If you fall behind on your mortgage payments, your lender may pull your credit to see if you’re at risk of defaulting on the loan.
- If you’re applying for a new loan: If you’re applying for a new loan, such as a home equity line of credit or a personal loan, your lender will likely pull your credit again to assess your creditworthiness for the new loan.
How to Protect Your Credit Score After Closing
There are a few things you can do to protect your credit score after closing:
- Avoid opening new credit accounts: Opening new credit accounts can lower your credit score, especially if you have a lot of open accounts or a short credit history.
- Keep your credit utilization low: Your credit utilization ratio is the amount of credit you’re using compared to your total available credit. Aim to keep your credit utilization below 30%.
- Make your mortgage payments on time: Making your mortgage payments on time is one of the best ways to improve your credit score.
- Monitor your credit report for errors: Check your credit report regularly for errors and dispute any inaccuracies.
In most cases, lenders won’t pull your credit again after closing. However, there are a few exceptions to this rule. By following the tips above, you can protect your credit score and avoid any surprises after closing.
Frequently Asked Questions
Q: Can I apply for a credit card after closing on my mortgage?
A: Yes, you can apply for a credit card after closing on your mortgage. However, it’s important to wait a few months before applying so that your credit score has time to recover from the mortgage application process.
Q: What happens if my credit score drops after closing?
A: If your credit score drops after closing, your lender may not be able to offer you the same interest rate or loan terms that you were originally approved for. In some cases, your lender may even deny your loan altogether.
Q: How long should I wait before applying for a new loan after closing?
A: It’s generally recommended that you wait at least six months before applying for a new loan after closing. This will give your credit score time to recover and will also show lenders that you’re a responsible borrower.
Q: What can I do if my lender pulls my credit after closing?
A: If your lender pulls your credit after closing, you should contact them to find out why. They may be able to explain why they pulled your credit and what they plan to do with the information.
Additional Resources
Do lenders run credit again before closing?
Usually, a lender will run your credit report at least twice: once when you apply for a new loan and once right before closing. Because of this, it’s crucial to avoid opening new accounts, taking on new debt, closing existing ones, or making any other changes to your credit report before closing day. Any unexpected credit changes can result in a delayed or even denied mortgage loan.
How long after closing can I apply for credit?
When it comes to opening a credit card after buying a house, there’s no hard and fast rule. Applying for a new credit card account may seem “safe” if your house loan has been approved and funded.
According to Jeanne Kelly, founder of The Kelly Group Coaching, “you can apply for credit as needed after you purchase your new home and close on the mortgage.” Applying for credit cards or lines of credit when you don’t need them is, in my opinion, a good idea because it demonstrates that you have accounts with available limits, low balances, and timely payments. ”.