Mortgage and Inquiries

[ChemGuy]

How damaging will a Chase CC inquiry be on my credit report prior to mortgage preapproval?  I'm interested in getting a CLI on my Chase card, but I'll be applying for a mortgage within the next 2-3 months.  I have 1 inq on EX, 0 on TU and 3 on EQ, and Chase is sure to pull EQ for me. 

I know mortgage lenders like to see CC's with lines of 10K or more.  I only have one 10K at the moment (AMEX) and I want to get at least one more.

Ideas?

[llecs]

IMO, don't do it.

I'm in the mortgage process now myself and don't have any CLs above $10k. Come think of it, I don't have any above $5k. No issues here, though. Already pre-approved.

[Lel]

I've never heard of a preference for CLs above a certain threshold.  I certainly didn't have any at that level when I qualified about 5 years ago.

Don't risk the inquiry.  You've already got a handful.  Were any of those for new credit accounts?

[MarineVietVet]

---

@ChemGuy wrote:

How damaging will a Chase CC inquiry be on my credit report prior to mortgage preapproval?  I'm interested in getting a CLI on my Chase card, but I'll be applying for a mortgage within the next 2-3 months.  I have 1 inq on EX, 0 on TU and 3 on EQ, and Chase is sure to pull EQ for me. 

I know mortgage lenders like to see CC's with lines of 10K or more.  I only have one 10K at the moment (AMEX) and I want to get at least one more.

Ideas?

---

That's new to me also. May I ask where you got that information?

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[ShanetheMortgageMan]

Back in the day I remember seeing some sub-prime lenders guidelines require a certain amount of open/active trade lines with minimum credit limits ($10k would've been real high though, I seem to think $5k was a common figure), but not on the majority of mortgage programs today.

[Anonymous]

I called the back-door Bank of America number to see if I could get a CLI on my visa

I've currently had a 4k limit for years and always pay in full each month.

I asked if this would be a hard inquiry because I was going to buy a new home this year (and did not want a hard inquiry). 

Her answer was the following:

#1) It will be an inquiry but it will not affect your score. 

#2) She also told me that since I would be applying for a new mortgage this year, its best if I consult before getting a CLI. 

Because some loan officers look at "too much" credit negatively. Its a sign of potential debt. 

My questions:

Was her answer on #1) , another way of saying its a soft pull?

Is the theory of potential debt  true? If not, what do you think a reasonable increase from $4000 would be?

My credit is above 700 on all 3 bureaus. 

Thanks

[ShanetheMortgageMan]

Since they are already your creditor, I believe they can do a promotional or soft inquiry, and those aren't listed on the credit reports a new creditor would be checking.  That may be a better question to ask in the general credit section however.

Too much available credit isn't an issue unless it is actually in use, they were just being overly cautious.  The only time I can think of unused credit as being an issue is when you have a home equity line of credit, in that situation, no matter what the usage is, mortgage lenders usually will calculate it's payment at anywhere from .25% to 1% of the HELOC limit for qualification purposes (or if the actual payment is higher, they use that).  So if you have a $100,000 HELOC limit, and only $5,000 in use, they will hit your debt to income ratio for $1,000/mo payment (if 1% is used).

[Anonymous]

Thanks Shane! 

I'll probably go ahead and ask for the CLI since I won't be using the available credit.

If I do decide to use, I will always pay in full each month. 

[Anonymous]

FYI, phone CSR's are pretty well known for knowing squat about stuff.  On the credit boards it is very common for people to be told they will get a soft inquiry and then get hit with a hard.  It seems there is little real reason for the credit increase beacuse lenders could care less how much availble credit you have and if you are seriously considering a mortgage you should do absolutely nothing that can affect your FICO score. 

Exceptions may be if utilization was high and by getting a CLI you would drop utilization % and therefore raise FICO score that way.  In general though, you should never apply for any new credit for at least 6 months prior to buying.  WIll it kill the deal, probably not unless you are already borderline.  BUT, why take the risk.  If you really need the CLI then apply for it immediately after you close and before the new mortgage reports. 

[Anonymous]

In general though, you should never apply for any new credit for at least 6 months prior to buying

Very good advice. I appreciate it. Its best that I don't do anything then!

I'm not in need of the extra credit, so I would be potentially jeopardizing an approval!