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Credit Do's and Don'ts in Columbia, Missouri

Mortgage and Lending with USA Mortgage NMLS: 156613 | MLO-1192

When you fill out a credit application during the loan process, we run a credit report for the underwriter. Each lender and loan program has different guidelines they must follow. You should not do anything that would have an adverse effect on your credit score while your loan is in process.

We know it's tempting. If you're moving into a new home, you might think about buying new furniture or new appliances, but it really isn't the right time to go shopping with your credit cards. You'll want to remain in a stable position until the loan closes and give us the opportunity to help you lock in the best interest rate we can possibly get for you.

Here is a list of some helpful credit do's and don'ts to keep in mind once your loan has gone into processing:


*DON'T apply for new credit of any kind

            If you receive invitations to apply for new lines of credit, don't respond. If you do, that company will pull your credit report and this will have an adverse effect on your credit score. Likewise don't establish new lines of credit for furniture, appliances, etc.

*DON'T pay off collections or charge-offs

            Once your loan application has been submitted, don't pay off collections unless the lender specifically asks you to in order to secure the loan. Generally, paying off old collections causes a drop in the credit score. The lender is only looking at the last two years of payment history.

*DO join a credit watch program

            Your bank, credit union, or credit card company might be able to provide you with a free credit watch program that can alert you to any changes in your credit report. This can be a safeguard to help you intervene before the underwriter sees a problem.

*DO stay current on exsisting accounts

            Late payments on your exsisting mortgage, car payment, or anything else that can be reported to a CRA can hurt you dearly. One 30-day late payment can cost anywhere from 50 to 100+ points on your credit score.

*DON'T close credit card accounts

            If you close a credit card account, it can affect your ratio to debt to avaliable credit which has a 30% impact on your credit score and also your length of credit history which has a 15% impact on your credit score. If you really want to close a credit card account, wait until after your loan closes.

*DO continue to use your credit cards as you normally would

            Red flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patterns, it could cause your score to go down. For example, if you've had your monthly Internet service statement billed to the same credit card for the past three years, there's really no reason to stop it now. Don't make any changes until after your loan is closed.