topic Re: PLOC before Mortgage? in General Credit Topics

PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 11:36:49 GMT

Hey there, I'm Lj. Been loving everyone's advice here, absorbing tons of info, and now for my first post. (Really looking forward to member status for signature!)

After the last 3 years of finally paying attention to my credit, I've come a long way and am proud of what I've accomplished credit wise, and now I'm looking to buy my first home. I have a good credit mix already but my SO doesn't and so I've been thinking of doing a joint Personal Line of credit, now that we've recently opened a joint savings account at Truist.

My question is: If I want to start the approval process in say the next 6 months or so, is it a good idea to apply for a PLOC now? My concern is having a new account/new inquiry. But I'd also love the extra cushion of available cash for unexpected expenses. The only significant way I still need to improve my credit report now is my length of credit history. TIA for any advice!

my generic sig:

MyFICO Fico 8 - 767 EQ

Vantage 3.0 - 766 TU

Inquiries 4

Derogatory/Delinquencies 0

1 vehicle loan

1 personal loan (small, my daughter pays)

Total Cards 6 (2 zero balance)(+5 closed)

Utilization 7%

AAoA 3.6 years

oldest acct 9 years

newest acct 1.5 years (5 new accts)

Re: PLOC before Mortgage?

JoeRockhead — Wed, 13 Mar 2024 12:16:39 GMT

If you're looking at qualifying for a mortgage in the next 6 months, I'd recommend against opening any new accounts right now. Adding a new revolving account is going to lower your AAoA. I'd wait until you close on your new home then add a PLOC if you're so inclined.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 12:17:54 GMT

That's what I'm afraid of. Thank you! I'm not in a rush to buy a house but I'd certainly like to sooner rather than later.

Re: PLOC before Mortgage?

JoeRockhead — Wed, 13 Mar 2024 12:20:32 GMT

If you were looking at a year+ before the new mortgage, I'd say go for it. Otherwise I'd stay as new account/inquiry free as you can.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 12:46:25 GMT

My SO only has a vehicle loan on his credit report (about a year old) and is an authorized user on his parents credit card. So I'm also curious if his credit file is too thin. He's always been a cash only guy till I came along haha. I could definitely wait a year to start the approval proces. So I guess now is it better for him to have next to nothing credit wise or 2 newer accounts. ?

Re: PLOC before Mortgage?

JoeRockhead — Wed, 13 Mar 2024 14:09:49 GMT

I guess it really depends on what his scores are. Having a car loan for a year is a plus but I'd be curious as to what his scores look like. Having a thin file when it comes to revolving accounts can cause suppressed scores just simply because there's not enough data on his revolving history. This could mean higher interest rates when it comes to mortgage time.

If anything, I'd leave your credit alone and continue letting it build time... you can always seek out CLIs on your existing cards...

For him I'd look at adding one or two cards (max) of his own over the next six months, keep the reported UTI on one card below 9%. Use the other one as well but keep it reporting at zero. Put the mortgage off for a year to allow both of your credit files to gain time and increased scores. You have pretty good scores already... a year from now you could very well be close to 800 FICO 8s and looking at better interest rates on your mortgage.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 13:09:08 GMT

Great advice, I really appreciate it!

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 13:09:53 GMT

He only has the free Experian app and his score is about 747 last I looked

Re: PLOC before Mortgage?

JoeRockhead — Wed, 13 Mar 2024 13:49:18 GMT

@LjHunter wrote:
He only has the free Experian app and his score is about 747 last I looked

You can also get free Equifax FICO 8 here at myFICO in case you didn't know.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 13:59:38 GMT

Yeah thanks! I just signed up myself a few days ago, will be getting the subscription soon probably too. Getting him to doing anything credit wise is like pulling teeth but I just screenshotted your suggestions to him so he knows it's not just me nagging haha.

Re: PLOC before Mortgage?

Horseshoez — Wed, 13 Mar 2024 14:04:59 GMT

@LjHunter, I would argue opening any new credit account less than a year before applying for credit is a very bad idea, regardless of how thin one's file is. Here is just one data point; I have spotless credit reports, all showing a single new credit card within the last year, I opened that card in August, even still, my middle Mortgage score is roughly 40 points below my FICO 8 scores and nearly 60 points below my FICO 9 scores.

Long story short, new accounts hurt mortgage scores more than pretty much any of your other scores.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 14:09:29 GMT

Ok so you think he's better off just going for the mortgage as he is now. I just wish I'd got him to get a credit card a couple years ago when I first asked!

Re: PLOC before Mortgage?

Horseshoez — Wed, 13 Mar 2024 14:20:43 GMT

@LjHunter wrote:
Ok so you think he's better off just going for the mortgage as he is now. I just wish I'd got him to get a credit card a couple years ago when I first asked!

Definitely. I just checked my scores from a couple years ago (the last time my youngest account was over a year old), and all three of my mortgage scores were 800 or higher, now they are all 50+ points lower.

Re: PLOC before Mortgage?

LjHunter — Wed, 13 Mar 2024 17:01:10 GMT

Good to know, thank you! I appreciate all the feedback.

Re: PLOC before Mortgage?

SouthJamaica — Wed, 13 Mar 2024 20:48:00 GMT

@LjHunter wrote:
Hey there, I'm Lj. Been loving everyone's advice here, absorbing tons of info, and now for my first post. (Really looking forward to member status for signature!)

After the last 3 years of finally paying attention to my credit, I've come a long way and am proud of what I've accomplished credit wise, and now I'm looking to buy my first home. I have a good credit mix already but my SO doesn't and so I've been thinking of doing a joint Personal Line of credit, now that we've recently opened a joint savings account at Truist.

My question is: If I want to start the approval process in say the next 6 months or so, is it a good idea to apply for a PLOC now? My concern is having a new account/new inquiry. But I'd also love the extra cushion of available cash for unexpected expenses. The only significant way I still need to improve my credit report now is my length of credit history. TIA for any advice!

my generic sig:
MyFICO Fico 8 - 767 EQ
Vantage 3.0 - 766 TU
Inquiries 4
Derogatory/Delinquencies 0
1 vehicle loan
1 personal loan (small, my daughter pays)
Total Cards 6 (2 zero balance)(+5 closed)
Utilization 7%
AAoA 3.6 years
oldest acct 9 years
newest acct 1.5 years (5 new accts)

You absolutely should NOT make any credit application in the 12 month run up to a mortgage application.

Re: PLOC before Mortgage?

LjHunter — Thu, 14 Mar 2024 02:32:26 GMT

Got it, we've decided to get my SO a credit card and wait at least a year. Not touching my credit now and it gives us a chance to save more for down payment. You guys have been super helpful! Thank you