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 and don’ts when looking for a mortgage.

Do stay current on existing accounts. One 30-day late can change your approval into a denial.

Do continue to use your credit as normal. If it appears you are changing your pattern, it can raise a red flag and affect your score.

Do call your loan officer. Call before making any address or credit changes that may affect the way your credit is reported.

Don’t apply for new types of credit.  Every time you have your credit pulled by a new type of credit issuer you can lose points from your credit score. This includes co-signing for a loan.

Don’t pay off collections or “charge-offs”.  If you want to pay off old accounts, do it with the loan. 

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 “max out” or over charge credit card accounts. 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 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.