Credit Do’s and Dont’s 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 and don’ts when you are looking for a mortage.

• DO STAY CURRENT ON EXISTING ACCOUNT.  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 creditor or lender, you can lose points from your credit score.  This includes co-signing for a loan.
• DON’T MAX OUR CREDIT CARDS.  Try to keep your credit card balances 30% below their limit during the loan process.  If you can pay down balances, do it across the board.
• DON’T CONSOLIDATE YOUR DEBT.  When you consolidate all of your debt into one or two credit cards, it will appear that you are “maxed out” on that card and you will be penalized.
• DON’T CLOSE CREDIT CARD ACCOUNT.  If you close a credit card account, it may appear that your debt ratio has gone up.  Closing credit card will affect other factors in the score, including credit history.
• DON’T PAY OFF COLLECTION OR “CHARGE-OFFS”.  If you want to pay off old accounts, do it through escrow.  Request a “letter of deletion” for the creditor.