Top 10 Credit Do’s and Don’ts

Applying for a mortgage? Follow these tips to make sure your credit score is not impacted!

  1. DON’T APPLY FOR NEW CREDIT OF ANY KIND.  Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately.
  2. DON’T PAY OFF COLLECTIONS OR CHARGE-OFFS.  If you want to pay off old accounts, do it through closing and make sure that 1) you validate that the debt is yours, and 2) the creditor agrees to give you a letter of deletion.
  3. DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the score that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history.
  4. DON’T MAX OUT OR OVER-CHARGE YOUR CREDIT CARD ACCOUNTS.  Try to keep your credit card balances below 30% of their available limit at all times during the loan process.
  5. DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS.  It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you.
  6. DON’T DO ANYTHING TO CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM.  This would include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.
  7. DO STAY CURRENT ON EXISTING ACCOUNTS.  Like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75.
  8. DO CONTINUE TO USE YOUR CREDIT AS NORMAL.  Red flags are raised easily with the scoring system. If it appears that you are changing your pattern, it will raise a red flag, and your score could go down.
  9. DO CHECK YOUR CREDIT BEFORE APPLYING AT ANNUALCREDITREPORT.COM  These credit inquiries do not affect your scores and will allow you to take care of any potential issues or errors prior to the loan process.
  10. DO CALL YOUR MORTGAGE BANKER.  Not sure if your credit score will be impacted? Contact your Mortgage Banker first!