Paying Off Debt Before Buying a Home? Start Here

If you have a lower credit score, paying down debt can help — but you want to be strategic.

Not all debt affects your credit the same way. Credit cards, car loans, student loans, collections, and mortgages are all treated differently by credit scoring models.

So before you start paying things off, look for the biggest bang for the buck.

That usually means asking two questions: Which debts are hurting your score the most? And which monthly payments are hurting your debt-to-income ratio the most?

Credit cards are often a good place to look, especially if the balances are high compared to the limits. But don’t close the accounts after you pay them down. A low or zero balance account can still help your credit profile.

Timing matters, too. If you want the lower balance to show on your credit report, pay it down early enough for the creditor to report it — usually at least 30 days.

And most important: talk to your mortgage broker before paying anything off. Sometimes paying off the wrong account right before applying can hurt more than it helps.

The goal isn’t just to pay off debt. It’s to make the right move at the right time.

And remember — it’s always okay to ask. We’re here to help you get home.