Paying off cards prior to preapproval?

[mrmoneypants]

My girlfriend and I are looking to consolidate homes and getting a new home built in anticipation of adding to the family. Part of the plan was to sell some stocks and pay off a couple cards used for furniture and medical just to improve the scores (around 7k). However I seemed to recall not making any large changes to accounts and such when i was going through the process myself several years ago. If at all, is it better to do this prior to starting this process or better to hold off? I'm sitting at 730 fico while she's at 810 (rubs it in every time she gets... lol)

[StartingOver10]

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@mrmoneypants wrote:

My girlfriend and I are looking to consolidate homes and getting a new home built in anticipation of adding to the family. Part of the plan was to sell some stocks and pay off a couple cards used for furniture and medical just to improve the scores (around 7k). However I seemed to recall not making any large changes to accounts and such when i was going through the process myself several years ago. If at all, is it better to do this prior to starting this process or better to hold off? I'm sitting at 730 fico while she's at 810 (rubs it in every time she gets... lol)

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Seems like you are in a great position now if those are your mortgage mid scores and not your FICO 8s.

Having said that, in general you want to be in the best possible position before you apply for pre-approval. The lender uses the lowest mid score for qualifying purposes so paying your debt down to its optimal level will get you the best score you can achieve with your credit profile.  If you can get to 740 you will have the best interest rates. If you can get to 760, you will have the best PMI rates (if applicable). If you are going FHA then don't worry about it because you will get the best rates with your current scores.

[Anonymous]

Great response by StartingOver.

And no, paying down CC debt will not be looked at as a danger signal.  It is very common for people preparing for a mortgage.  The ideal place for you would be all your cards at $0 except one, with the remaining card reporting a small balance.  That would be perfect.  If you can do that and still have the money you need for a downpayment, then it's basically a no brainer.

And yes be sure that the scores are true mortgage scores rather than the far easier to obtain FICO 8.  There's no easy way to get your mortgage scores without paying money for them, however, so personally I would do the CC paydown first, confirm that the new CC balances are being reflected in all three credit bureau databases, and then pull your mortgage scores here at myFICO.  We can suggest a way to do that which will cost you $30.