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Do's and Don'ts with your Credit!
Now that’s a word that makes any mortgage professional get the chills. Let’s
say it again...underwriting...brrrr...those blasted pencil pushers just making
all our lives more miserable. Over 90% of our clients are seeking a loan
approval for a home. This has naturally turned our business model into a niche
specialty. So, whether it’s underwriting issues or last minute bad credit
ideas, today’s credit tip will focus on the largest mistakes clients and their
mortgage professionals make when trying to get their credit ready for closing.
off/settling collections - This is generally a bad idea, as it will cause
your score to drop as your activity date gets renewed. However, let’s say
underwriting is forcing you to take care of it for the loan. Then all you need
to do is simply pay it off right before closing and bring the paid-off
document. This way the payoff doesn’t have time to negatively impact your
down revolving accounts - Who does this? You need at least one revolving
account to meet the minimum criteria of the scoring algorithms used by all
three credit bureaus.
off your auto and student loans - Not a good plan. When you pay your
installment accounts they close naturally, and then you lose your length of
credit history. A better approach is to simply pay the minimum amount for as
long as possible.
- Okay, so your credit report looks kind of blank! Don’t go nuts and apply for
too much. That won’t help and you will receive too many inquiries. Less is
more. Apply for one secured credit card and use it sparingly each month. If
those pesky underwriters want you to have three minimum open trade
lines...well, that is really annoying. Next, try inheriting a couple of
positive credit accounts from a close relative. Regardless, get your own as
well; you’ll be grateful in the end.
Disputes - This is a
standalone credit tip all by itself. Long story short, we have a dispute
resolution team that only specializes in dispute removal; so check with us
before submittal so we can avoid these nightmares.
- Unfortunately, most student loans are government backed so they don’t just
disappear after a certain time. And no one hands out mortgage loans with
student loans collections running rampant. Therefore, get on a new payment plan
(no need to pay them off in full, that’s unrealistic), and make sure that part
of the payment plan is a requirement that the loans will be put back into good
standing several months later (You won’t have to wait this long for the loan,
it’s more of an end-game strategy).
No, these bureaus are not in your corner, but we are; so please call us today at 303-531-0411 or send us a quick e-mail below to get started!