A buyer most keep in mind that the actual lender will pull their own credit report just before closing, if your credit score has dropped, you may no longer qualify for the same rate that was approved at the time of underwriting. Final approval may come back with a Higher rate. Unfortunately all lenders qualify you by your credit score. Your credit score will determine what loan you may qualify for. This is what most borrowers don't understand, and they thing the loan officer is batting and switching. They are not. If an issue comes up that the lender decides you do not qualify for a certain loan, the only things the loan officer can do is shop for a lenders and see if any are willing to give the rate and program they thought you qualified for. But don't expect them to stand by their quote if and when they pull your credit and your scores have dropped.
Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:
- Don't apply for new credit of any kind.
- Don't pay off collections or charge offs during the loan process. Paying collections will decrease the credit score immediately.
- Don't close credit card accounts.
- Don't max out or over charge on your credit card accounts.
- Don't consolidate your debt onto 1 or 2 credit cards.
- Don't do anything that will cause a red flag to be raised by the scoring system. This would include adding a new account, co-signing on a loan, changing your name or address with the bureaus. The less activity on your report during the loan process, the better.
- Do join a credit watch program.
- Do stay current on existing accounts.
- Do continue to use your credit as normal.
- Do call your Broker if you receive something in the mail from a creditor or collection agency that you agency that may affect your score during the loan process.
- Do call your Broker if you are thing of changing a job or career change. Switching jobs or careers can change your loan approval to loan declination.
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