Will Applying for New Credit Card Affect future Mortgage Application?

[Jazzzy]

---

@Anonymous wrote:

Lynette,

Thank you for your answer.

Although my scores are high I am concerned because in October 2009, a friend of mine who is a Sr. VP at a bank recommended I apply for a personal LOC in the amount of $ 20k.  I have had an installment loan with him for over a year and have always made my payments on time. I followed his advice and applied for the LOC. He pulled my credit on 10/1/09 and EQ was 802. 

He later said that because I did not an have an extensive relationship with the bank ( I only have the installment loan and the checking account they debit for the monthly payment), that he recommended I apply at a bank where I have my primary checking and savings account. Of course he knew this when he recommended I apply for the LOC.  I bank with Citi and they are not currently issuing personal LOC over I think it is $ 3k to $ 5k.  That is why I applied at Wells and again the banker told me that with my score and my income level approx. $ 120k, that I should easily get a Personal LOC for $ 25k to 30K.  Instead they approved me for only $ 5k which does not do me much good. 

So now I have two very recent inquiries that have not done me much good.  That is why I'm a little concerned when I refi my mortgage in Jan 2010.  I have been thinking of asking my banker friend to remove their credit inquiry from my CR, since it was their recommendation and then they bailed out due to non credit related issues.  Do you know if the bank would do that?  He is afterall  a friend of mine.

The original reason to get the LOC was to pay down some of my wife's higher interest rate CC debt and have some reserve funds for unexpected expenses.

 I know that is alot to absorb, but any advice anyone can give me would be much appreciated.  At this point I am unsure of whether I should go ahead and open the Wells LOC, since the inquiry has already been done, and I was approved.  I assume right now, until I open the LOC, it does not show as a new account, only an inquiry.  If I open the account, it will show as a new account, which is probably a negative, but then my available credit will go up, thus my debt to available ration will go down.

---

I believe the bank has the ability to recode their inquiry from a hard inquiry to a soft one. Soft inquiries don't count against you. It doesn't hurt to ask.

Do you know why Wells Fargo only approved you for $5k? Is your credit card utilization high? The credit market is much tighter than it used to be.

You may want to call Wells Fargo and see if they report the LOC even if you don't activate it. That would be nice to know for sure. People have talked about credit cards showing up on their reports before they activate them...

[marty56]

---

@Anonymous wrote:

Thanks for the help everyone.

Marth56: What is a MR? Sorry I am new to the whole credit scene.

---

MR is a Manual Review.  Someone or a group of someones actually look at your credit report.  I do not know what things they are specifcally looking for but they know for example that 2 people could have the same credit score but very different content in their report.

[Anonymous]

thanks for the information. I will ask my banker friend if they can recode to a soft inquiry.

My CC utilization is only $ 1k with a total available of $ 5,700.

some of the Credit bureaus count my HELOC of $ 79k out of $ 80k as a revolving account instead of a mortgage.

Is there a way to get the Credit bureau to recode as a mortgage, or do I check with my bank on that.

[Lel]

---

cpacfp wrote:

thanks for the information. I will ask my banker friend if they can recode to a soft inquiry.

My CC utilization is only $ 1k with a total available of $ 5,700.

some of the Credit bureaus count my HELOC of $ 79k out of $ 80k as a revolving account instead of a mortgage.

Is there a way to get the Credit bureau to recode as a mortgage, or do I check with my bank on that.

---

A HELOC is technically still revolving debt.  However, a HELOC with a limit of $80,000 is typically scored as a mortgage, regardless of how it is coded on your credit reports.

Because your FICO scores are relatively high, it's unlikely that your HELOC is being scored as revolving debt.  If it were, your utilization of revolving credit would be high (over 90%), and your score would suffer.  What is the utilization reported on your myFICO reports?

I have a HELOC with a $98,000 CL.  It currently has a balance of about $85,000.  On EQ, it's reported as revolving.  On TU, it's reported as overdraft/reserve checking.  Despite these classifications and the outstanding balance, my total utilization of revolving credit is 3%.  If my HELOC were really included in this calculation, then my util would be about 70%, and my score would be much lower.

So if your own reports indicate that your HELOC is not involved in the calculation of utilization, then I wouldn't worry about getting it reclassified.  It's not have an effect on your score.  It's being treated as mortgage/installment debt for FICO scoring purposes.

[Anonymous]

Equifax and TU have it coded as a mortgage, but Experian has it coded as revolving.  On the Experiandirect.com report it states, " that my ratio of balances to credit limits across my revolving accounts, such as credit cards is too high.  Having a high proortin of balances to credit limits on revolving accounts has a negative impact on your credit score. (RT)"- this is on the Vantage Score Report.

is there a way to get Experian to recode it as a mortgage debt?

I dont know my Experian FICO score but my Plus Score is 685 and the score I get from Identity Guard is 738.

My EQ and TU scores from Identity guard are pretty close to my FICO scores so I'm assuming my Experian FICO is pretty close to 738.

[Jazzzy]

---

@Anonymous wrote:

thanks for the information. I will ask my banker friend if they can recode to a soft inquiry.

My CC utilization is only $ 1k with a total available of $ 5,700.

some of the Credit bureaus count my HELOC of $ 79k out of $ 80k as a revolving account instead of a mortgage.

Is there a way to get the Credit bureau to recode as a mortgage, or do I check with my bank on that.

---

Just a thought....you may have gotten the comment about high utilization because your utilization given above is over 17%. That could be considered high in and of itself.

Pay that $1k off before the statement cuts, and that comment may go away.

We have a big HELOC, and I've never had it cause me problems on FICO scores, but Discover, for example, counted it as revolving and commented on it. I had to call them for reconsideration, and it was successful...but HELOCs cause issues.

Another thought is that once you get pretty high scores, the "reasons" given as negatives get to be kind of a stretch. I once got that comment with 8% utilization.