If your credit changes after you lock your mortgage rate, lenders will re-pull your credit before closing. Significant negative changes could affect your loan approval or rate. Staying financially stable during the lock period is critical.
Here is how credit changes after a rate lock work and what you should do.
Lenders Re-Pull Your Credit
Most lenders run a soft credit inquiry shortly before closing to verify that your credit profile has not changed significantly. This is a standard part of the underwriting process. They are checking for new accounts, late payments, or increased debt.
If your credit looks the same or better, your locked rate and approval remain unchanged. If your credit has deteriorated, the lender may need to reassess your loan terms.
Impact of Negative Credit Changes
If your credit score drops significantly or you miss a payment, the lender may determine that you are a higher risk. This could result in a higher interest rate, increased mortgage insurance costs, or even loan denial in severe cases.
Your locked rate is guaranteed based on the credit profile at the time of locking. If that profile changes, the rate is no longer supported. The lender may offer a new rate based on your current credit.
How to Stay Stable
- Do not open new credit accounts before closing.
- Do not miss any payments on existing accounts.
- Do not carry large balances on credit cards.
- Do not co-sign for anyone else's loan.
- Contact your lender before making any major financial decisions.
Bottom Line
Your rate lock is tied to your credit at the time of locking. Keep your finances stable and avoid new debt until after closing.
