Opening a new CC before applying for a mortgage

Anonymous · ‎02-26-2017

I'm about 15 months away from applying for a mortgage. I recently refinanced my car (lower intIerest rate and shorter term) and consolidated my student loans (switched from variable interest rate to fixed), so my average age of credit history has dropped. I currently have 4 credit cards aged 7y, 1.5y, 1y and 7m. Two of them have a $0 balance, the other two I pay in full every month. I've been getting some good prequalified offers and I'm tempted to apply for a new card to finance some medical expenses without paying interest. I do have the cash to pay for them, but paying over time is obviously more attractive for me.

My worry is that if I open a new CC account, and I apply for a mortgage in May 2018, that will be 5 new accounts opened in the 24 months before applying (the student loan consolidation is two separate loans, subsidized and unsubsidized). Will they give me a hard time for opening so many new accounts? Will they accept the explanation that the car loan and student loans wasn't me taking on new debt, it was restructuring old debt?

Sbrooks1 · ‎02-26-2017

I think that is plenty of time to not cause you any worries. I financed a new car in august and opened Discover and Amex in October. Applied in Jan for mortgage and had to write short LOX for the CC. But it has not caused me any problems so far!

Anonymous · ‎02-26-2017

I opened Amex, Citi, and Chase 3 weeks before I applied. I told them before hand and they are cool with it. These cards were opened to move balance around so as not to pay interest. Although I am still in the process because the house is being built, they seem to be completely fine with the cards

Revelate · ‎02-26-2017

@Anonymous wrote:
I opened Amex, Citi, and Chase 3 weeks before I applied. I told them before hand and they are cool with it. These cards were opened to move balance around so as not to pay interest. Although I am still in the process because the house is being built, they seem to be completely fine with the cards

I wouldn't agree with this as all; your experience simply isn't likely with a number of lenders.

15 months before do whatever you want; 3 weeks before, no no no. Why even? Mortgage >> any credit card, or even all credit cards... life won't change materially going without credit cards for a couple of weeks or months, but either making your mortgage more painful, lowering your score and possibly dropping a tier, or even jeopardizing the underwriting of the loan makes absolutely no rational sense in my opinion.

Keep your eyes on the prize, credit cards don't rate.

StartingOver10 · ‎02-27-2017

^^In general, I agree with Rev's post. There are exceptions though: I had one of my buyers apply for a cc just before applying for a mortgage because he had a Bk and never re-established himself after the Bk with any type of revolving account. He was showing no score - only the Bk from 5 years before. Just adding one card got him into a good enough range to get a conventional mortgage. That card was applied for just over 30 days prior to a mortgage application. There are golden rules for mortgage applications and that is what Rev is referencing. There are also exceptions

Anonymous · ‎02-28-2017

@Revelate wrote:
@Anonymous wrote:
I opened Amex, Citi, and Chase 3 weeks before I applied. I told them before hand and they are cool with it. These cards were opened to move balance around so as not to pay interest. Although I am still in the process because the house is being built, they seem to be completely fine with the cards
I wouldn't agree with this as all; your experience simply isn't likely with a number of lenders.

15 months before do whatever you want; 3 weeks before, no no no. Why even? Mortgage >> any credit card, or even all credit cards... life won't change materially going without credit cards for a couple of weeks or months, but either making your mortgage more painful, lowering your score and possibly dropping a tier, or even jeopardizing the underwriting of the loan makes absolutely no rational sense in my opinion.

Keep your eyes on the prize, credit cards don't rate.

If applying for credit cards was as suicidal as a lot of people on this forum make it seem, I dont think lenders would be asking people to explain recent inquiries. Like I said, my application is going smoothly so far and these 3 cards are the only cards I currently have balances. When it is time for closing, i would only have balances on 2 of them

Anonymous · ‎03-01-2017

Can anyone tell me what the median morgage score is for highest interest rate?

I am not sure why but there is so little information on the internet about this....

myFICO shows 760 and above gives you it, but I've heard 740 many times. Not sure why this is so hard to understand.

StartingOver10 · ‎03-01-2017

@Anonymous wrote:
Can anyone tell me what the median morgage score is for highest interest rate?
I am not sure why but there is so little information on the internet about this....

myFICO shows 760 and above gives you it, but I've heard 740 many times. Not sure why this is so hard to understand.

It's hard to understand because different lenders have different overlays for different programs. At 760 mortgage mid score you are in the top tier for the best rates anyway

Try another lender if your current lender is giving you an above market rate. There really are differences between lenders and mortgage programs. I am assuming you are going with a conventional loan with no lender contribution and you aren't having a home built. I am also assuming you want the lowest interest rate and not the highest.