Credit Do’s & Don’ts During the Loan Process
Good credit is critical when it comes to obtaining the best interest rates and terms on a mortgage.
Here are some credit do’s & don’ts when looking for a mortgage.
DO stay current on existing accounts- one 30-day notice can cost you.
DO continue to use your credit as normal- changing your pattern will raise a red flag and lower your credit score
DO call your mortgage professional- before making any address or credit changes
DON’T apply for new credit- every time you have your credit pulled by a potential credit or lender, you can lose points from your credit score. This includes co-signing for a loan
DON’T max out credit cards- try to keep your credit card balances 30% below their limit during the loan process. If you pay down balances, do it across the board
DON’T close credit card accounts- if you close a credit card account, it may appear that your debt ratio has gone up. Closing a card will affect other factors in the score, including credit history
DON’T pay off collections or “charge-offs”- if you want to pay off old accounts, do it through escrow. Request a “letter of deletion” from the creditor
DON’T consolidate your debt- when you consolidate all of your debt onto one or two credit cards, it will appear that you are “maxed out” on that card and you will be penalized