Buyers listen up____before you ride off into the sun set make sure and follow this advice.
If you are entering into a loan transaction in the next 6 months:
- DON’T APPLY FOR NEW CREDIT OF ANY KIND. This includes those “You have been pre-approved” credit card invitations that you receive in the mail. You could lose anywhere from 2-50 points for one hard inquiry.
- DON’T PAY OFF COLLECTIONS OR CHARGE OFFS DURING
THE LOAN PROCESS. - DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account, it will appear to FICO that your debt ratio has gone up.
- DON’T MAX OUT OR OVER-CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring about an immediate drop of 50-100 points in your credit score. Try to keep your credit card balances below 30% of their available limit at all times during the loan process.
- DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. If you want to save money on credit card interest rates, wait until after closing.
- DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus.
- DO STAY CURRENT ON EXISTINGING ACCOUNTS. This includes your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.
- DO CONTINUE TO USE YOUR CREDIT AS NORMAL.
- DO CALL YOUR MORTGAGE PROFESSIONAL if you receive something in the mail from a creditor or collection agency that you believe may affect your score during the loan process.
