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February 8, 2012


Followingare some helpful tips to avoid the credit mistakes many borrowers make duringthe loan process:

1.     DON’T APPLY FOR NEW CREDIT OF ANY KIND, includingthose “You have been pre-approved” credit card invitations that you receive inthe mail. Every time that you have your credit pulled by a potential creditoror lender, you lose points from your credit score immediately. Depending on theelements in your current credit report, you could lose anywhere from 2-50points for one hard inquiry.

2.     DON’T PAY OFF COLLECTIONS OR CHARGE-OFFS during theloan process. Paying collections will decrease the credit score immediately dueto the date of last activity becoming recent. If you want to pay off old accounts,do it through closing and make sure that 1) you validate that the debt isyours, and 2) that the creditor agrees to give you a letter of deletion.
3.     DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit cardaccount it will appear to the FICO that your debt ratio has gone up. Also,closing a card will affect other factors in the score such as length of credithistory. If you have to close a credit card account, do it after closing, andmake sure it is a more recent account.
4.     DON’T MAX OUT OR OVER-CHARGE YOUR CREDIT CARD ACCOUNTS. This isthe fastest way to bring your score down 50-100 points immediately. Try to keepyour credit card balances below 30% of their available limit at all timesduring the loan process. If you decide to pay down balances, do it across the board- make an extra payment on all of your cards at the same time.
5.     DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seemslike it would be the smart thing to do, however, when you consolidate all ofyour debt onto one card, it appears that you are maxed out on that card, andthe system will penalize you as mentioned above in 4. If you want to save moneyon credit card interest rates, wait until after closing.
6.     DON’T DO ANYTHING TO CAUSE A RED FLAG TO BE RAISED BY THE SCORINGSYSTEM. This would include adding new accounts, co-signing on a loan,changing your name or address with the bureaus. The less activity on yourreports during the loan process, the better.
7.     DO JOIN A CREDIT WATCH PROGRAM. If you join a creditwatch program, you can check your reports weekly, or even daily depending onthe program you select. (When you pull your own reports, you don’t getdinged for a hard inquiry.) This way, if something does show up on yourreports that has caused your score to go down, you’ll know it immediately, andyou may be able to take care of the problem before closing.
8.     DO STAY CURRENT ON EXISTING ACCOUNTS. Likeyour mortgage and car payments. One 30-day late can cost you anywhere from30-75.
9.     DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red flagsare raised easily with the scoring system. If it appears that you are changingyour pattern, it will raise a red flag, and your score could go down.
10.   DO CALL YOUR LOAN ORIGINATOR if you receive something in themail from a creditor or collection agency that you believe may affect yourscore during the loan process. Your broker may be able to supply you with theresources you need to stop any derogatory reporting to the bureaus.

Keep in mind that the lender will pull their own credit report atclosing, and if your scores have dropped, you may no longer qualify for therate that was underwritten and the final approval may come back with a higherrate. All lenders use your credit score to determine which loan criteriayou fit and every loan has different criteria attached (the loan-to-value anddebt-to-income ratios, etc.) Many borrowers do not understand this, andmistakenly think the loan officer is “baiting and switching.” If an issue comesup and the lender decides you do not qualify for a certain loan, the only thinga loan officer can do is search for other lenders who might be willing to givethe rate and program they thought you qualified for. If you have good creditand know your score, the loan officer can give you an idea of what he or shecan offer based on what you state. But do not expect them to stand by theirquote if your scores are lower when they pull your credit.

Written By:

Karmel Roe NMLS 350250 l DRE 01276427
Broker / MLO With Platinum Mortgage Company
E-mail: Karmel


First, Complete out a loan application on our website -Go to
-Click on Apply Now at the top
-Scroll to the middle of the page and Click on 3. Full Application

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