Buyers Beware....You could be Hurting Your Credit Score!

Buyers Beware...You could be Hurting Your Credit Score, isn't because of some scam or purchase you make although that could hurt your credit score too!

Recently a buyer for one of my listings was doing everything right to maintain her credit score before the purchase of a home.

She was making her rent payments, her credit cards and car payment on time without fail.  The perfect buyer!

She like many First Time Buyers had been working on establishing her credit.  She had paid cash for nearly all of her purchases, at her parents urging to keep out of debt.  The old school of thinking is no pay cash and only buy what you can pay for, to bad more people didn't subscribe to that we would have less foreclosures right now.  Sorry, thinking out loud in words again, everything is a payment.  If you base your life on payments instead of affordability if something happens you could be only one or two payments from the street!

So she had little credit established...it wasn't poor credit just little credit.  So using her rent, monthly credit card and car payments she was approved for a loan.

She found my listing and an offer was written.  She is all smiles and loves the home.  The appraisal confirmed the purchase price to be fine.  The inspections yielded more happy results with nothing needing repair.  She could hardly be happier.

A week before close the lender runs a second credit report, as is customary, to make sure no changes have taken place with purchases that were not disclosed when the loan was established.

The report comes back and she has dropped 6 points on her credit score!  Below the lenders acceptable limit for granting loans under the new lending guidelines.  She calls me in tears. 

She was working so hard to protect her credit score that she paid off her credit card and then canceled it!  Canceling her credit card caused her credit score to drop.  Why?  Simple she no longer has the same credit available.  If she had just paid offer her credit card it would have been fine.  Since she canceled it that is treated like less credit and affected her credit score negatively.

Before you make changes in your spending or buying habits speak with your lender.  Make sure you know that your efforts to improve your credit score are really going to work.  By the way I was able to get a lender waiver on the 6 point drop with the underwriter because her efforts were to improve her debt ratio not spend more.  She is smiling again!

Buyer's Beware your good effort could hurt your Credit Score!

First Time Buyers up to $8000.00 tax credit until November 30th.  Live in the Grand Rapids or West Michigan, not under buyer agency and need expert help to buy a home....give me a call.  It could save you thousands in your next real estate transaction.  FlexIt Realty designs selling and buying programs to meet our clients' needs.  Your call is always confidential and you are never pressured.

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Call Toll Free:  877-667-4699     Local: 616-784-2360    Email: garywhite@FlexItRealty.com