Pay Off Credit Card Prior to Closing?

Question

Hi guys, my understanding is that the bank will check my credit one more time just prior to closing. Would it be wise to pay off my credit accounts prior to that?

Account Closed · Answer

It really doesn't matter if you pay your debts off prior to closing because it will not affect the loan decision negatively.  Your credit score will no doubt increase.  Also, the increase in your available credit could move your score from one range to another i.e. from a score of good to very good or very good to excellent.  However, a lender will not change the interest rate at which you were previously locked due to a better score.  What will no doubt affect you is increasing your debt, which ultimately increase your debt-to-income ratio and can result in the lender declining your loan.

Eric van Dalen · Answer

Sounds good. Thanks.

Melvin List · Answer

@Eric van Dalen if you are already approved I would wait on paying off the cards.  Paying off the cards during the process could create more documentation to verfiy

Matt M. · Answer

@Eric van Dalen

Paying cards off makes no difference. It’s not charging anything that is what’s important.

In 2010 I was waiting to close on a house, I went and bought all new appliances. My mortgage guy was a friend of mine, he made me return them as I opened a Best Buy card to buy them with 0% interest. Close call, it could have ended up bad!

April C. · Answer

I just closed on 2 properties and paid off my home depot prior to closing because I can't stand having debt. "Bad" dept and nothing happened after they checked credit prior to closing. Now if you purchase stuff before closing it's an issue.