Most consumers are not aware that lenders re-check a borrower's credit 24 hours prior to the closing of their home loan. Any changes to the credit history can result in a "Denial" the day before closing! Yikes! Here's a quick checklist to help consumers avoid sabotaging their own home loan:
1. Don’t buy a new car or trade up to a bigger lease
2. Don’t apply for credit ANYWHERE! Even if you don’t use it. The inquiry is what will cost you points and lower your score.
3. Don’t apply for a department store credit card for the 20% discount. Even if you pay it off that day, it will negatively affect your credit score.
4. Don’t quit your job to change industries or start a new company. Lenders are looking for a 2 year job history in the same line of work.
5. Don’t get fired, quit or change your job.
6. Don’t transfer large sums of money between bank accounts.
7. Don’t forget to pay your bills on time – even the ones in dispute.
8. Don’t increase your credit line on existing credit cards and/or lines of credit.
9. Don’t accept a cash gift without filing the “gift” paperwork. Keep a copy of the “gift check”
10. Don’t deposit large sums of money into your checking account that cannot be verified in some way. Any cash deposited will need to “season” for 60 days prior to closing if it cannot be verified. (ie: cash you have stashed at home)
11. Don't allow your checking account to go into "overdraft". Even if you fund the "overdraft" through your savings account. This makes you look financially irresponsible to the underwriter.
12. Don't pay off an old collection without first checking with your lender. Paying off old collections can actually "reactivate" the collection and lower your credit score. Check with your lender BEFORE you pay anything!
Bottom line, wait until AFTER your loan closes to make any changes that would affect your credit worthiness! If a question or concern comes up during the loan process, ask your lender. They have the knowledge to keep your loan on the right track!