Top Ten Credit Do’s And Don’t During Loan Process
Keep in mind the actual lender will pull your credit report at closing. If your scores have dropped you may no longer qualify for the rate that was underwritten and the final approval may come back with a higher rate. Unfortunately, all lenders qualify you by your credit score. Your score determines which criteria you fit and every loan has different criteria; loan to value, debt to ratio and so on. Some borrowers may think the loan officer is baiting and switching, but this is not the case. If an issue comes up and the lender decides you do not qualify for a certain loan, the loan officer can shop for lenders to see if any are willing to give the rate and program they thought you qualified for. If you have good credit and know your score, the loan officer can give you an idea what he or she can offer based on what you say. But do not expect them to stand by their quote if when they pull your credit your scores have dropped.
Why It Matters: Knowing what you should and shouldn’t do can affect the terms of your loan. It is always best to be as educated as possible about the loan process to ensure you are getting the best deal for you.
What You Need to Know: Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:
- DON’T Apply for new credit of any kind
- DON’T Pay off collections or charge-offs
- DON’T Close credit card accounts
- DON’T Max-out or overcharge on your credit card accounts
- DON’T Consolidate your debt on to 1 or 2 credit cards.
- DON’T Do anything that will cause a red flag to be raised by the scoring system
- DO Join a credit watch program
- DO Stay current on existing accounts
- DO Continue to use your credit as normal
- DO Call your mortgage advisor.
STEPS TO TAKE
Order a copy of your credit record once a year for free from www.annualcreditreport.com. Stay current on all of your bills and accounts. It could be very damaging to the loan process to have delinquencies. Don’t apply for new credit when you are going through the loan process. Stick to what you have and maintain it as best as possible.