Not sure how many times I can say it !!!

I’m not sure how many times I can tell clients the following:

Do NOT apply for any new credit, or make any changes to your credit profile, during the mortgage process.

Do NOT open new credit cards.  Do NOT sign new lease agreements that can affect your credit score.  Do NOT transfer balances from a loan or existing credit card to a new loan or new 0% APR credit card.  Do NOT go buy another house that you haven’t informed your lender about.  Do NOT go buy a new car.  Do NOT go buy a new motor-home.  Do NOT pay any of your bills late.  Do NOT do anything during the mortgage process that can cause your credit score or credit profile to change.

Changes to a credit profile that affect the credit score -OR- the debt load can cause a mortgage pre-approval to be voided.  In rare cases, I’ve seen credit re-checks by underwriting cause an approved loan to be changed to a decline.

I talk about this issue in my very first consultation with perspective buyers.  I have real-estate agents remind their clients about this issue.  “Do NOT do anything that changes your credit report or your score” is written in big bold letter across my new client handout.

Yet, at least once a month I have a deal where a change to the credit report delays or threatens the loan at the 11th hour.

I cannot stress enough how important it for a buyer to not do anything during the mortgage process that could affect his credit score.  Here are just a handful of things that can negatively affect your credit score and put your loan in jeopardy:

-opening new credit trade-line (this includes balance transfers or opening a new department store card in order to save 10%)

-paying a debt late

-closing established credit card accounts

-obtaining a new car loan, personal loan, personal line of credit, home loan (on another property), or new student loan

-increasing the debt load on an existing credit account

If you, or someone you know, is buying a home, please pass this information along to them.  Just this week I had a deal almost fall apart because a client opened a new Nordstrom’s credit card account in an attempt to save 20% off her first purchase.  By doing so, the client established a new credit trade-line with a $1,000 available limit and a $1,000 balance.  This new “maxed-out” credit card caused her score to drop below the 720 FICO which is required for her particular loan product.  In an attempt to save $200 at Nordstrom, this client delayed the escrow on her $500,000 house by two weeks and put the entire deal at risk.

As always, if you have questions, please don’t hesitate to email me at TrustYourLender@gmail.com