While you can technically use your credit card while in escrow, it is highly recommended to avoid large purchases, new credit accounts, or significant balance increases. Lenders often re-verify credit and financial standing just before closing; new debt can negatively impact your debt-to-income (DTI) ratio and credit score, potentially delaying or denying your mortgage.
Most financial institutions allow you to pay into your escrow account using a major credit card, electronic bank transfer, or an online payment service such as PayPal.
While you're waiting to close on a home, you can still use your credit card, but it's best to only use it for small purchases and pay off the balance in full. Do not make large purchases you cannot afford to pay off that'll leave you carrying a significant balance each month.
In the meantime, make sure you don't make these common credit mistakes that can undermine your smooth closing:
Your lender holds your funds until the bills are due, which means you can't access the money for other uses. You may be missing out on interest or profits from investments on your money while it is sitting in the escrow account. Your monthly mortgage payment may change as taxes and insurance premiums change.
Policies vary by mortgage servicer, but many servicers – including Rocket Mortgage® – won't allow you to pay an escrow shortage with a credit card. That's primarily because mortgage and escrow payments deal with large amounts of money.
Common escrow issues include: Misapplied payments. Missed payments for property taxes or insurance. Unjustified fees. Errors during account transfers to a new servicer.
You should avoid applying for other loans (including payday loans), opening a new line of credit (such as a credit card), or even cosigning on a loan. All these activities will show up on your credit report. Your lender will see the increase in debt and required monthly payments.
The 2-2-2 credit rule is a guideline for building strong credit, suggesting you should have two active credit accounts (like cards or loans) for at least two years, with consistent on-time payments for those two years, often with a minimum credit limit of $2,000 per account, to demonstrate financial responsibility to lenders, especially for mortgages. It's a benchmark to show you can handle credit well over time, reducing lender risk and improving approval odds for major loans.
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
Documentation Issues
Even one incorrect or missing document can halt the process. You need to submit a variety of documents during the home buying process. And, if even one is incomplete, inaccurate, or missing, you won't close on time.
Make An Earnest Money Deposit
Earnest money may only be paid online via an electronic check draft and never with a credit card. There are two main reasons why: Proof of earnest money payments must be provided to the buyer's lender.
How long does each stage of a house closing take?
Once you receive clear to close, you are typically one to five business days away from closing, depending on several factors: Closing Disclosure Timing: Federal law requires you to receive your closing disclosure at least three business days before closing.
Avoid Major Financial Changes: Opening new credit lines, making large purchases, or changing jobs during escrow can trigger a re-review of your financing. Schedule Inspections Early: The sooner inspections are completed, the sooner any issues can be addressed without bumping against the closing date.
You generally need a credit score of at least 620 to qualify for a conventional mortgage, though every lender is different. FHA loans, which are backed by the federal government, may be an option for individuals with credit scores as low as 500.