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OKay my wife and I started the house buying process. THe loan officer called today and said we were pre approved since my wife's middle score is 739 and mine is 705. He told us though to open 2 new credit card accounts to push us over that 740 line. Has anyone heard of this. Our DTI ratio is 32% since we don't carry credit card balances and only have a car payment and a unsecure loan currently open. We have credit cards just with $0 balances. We use them every 6 month and put like $5 on them.
Since the loan officer told us this what are the best 2 cards to open that have the best effect on the score. I know that opening some accounts actually is bad for the score so I wanted to reach out the community and see what you all had to say.
What?! NO.
Opening new credit accounts when in the midst of buying a home is totally a big HUGE no no no no in the mortgage lending arena, unless you're a few months out from even putting an offer in? Getting the cards will cost you HPs and a hit, which will initially cause your scores to drop. You'll only see increases in your scores if the limits are high enough to offset the UTL.
Further, your DTI will NOT improve whatsoever if your balances on your current cards is ZERO. It's your total PAYMENTS compared to your total INCOME. You could have 100 cards or 1 card, if you have no payments because they're all at zero, your DTI would be the same percentage.
Odd advice from a loan officer, especially with your scores. Just curious what is the logic behind getting the score over 740? lower interest rate?
@creditguy wrote:Odd advice from a loan officer, especially with your scores. Just curious what is the logic behind getting the score over 740? lower interest rate?
Um yes! The time that scores REALLY matter, as you don't (usually) have the ability to PIF after the first month so the APR is critical and 740 will give better rates than say 700.
gotcha, I figured as much. I just thought it was odd to advise opening new cards when you could possibly take a hit on your score instead of improving it.
If your UTILITY was 32% then I could see that getting a new card or two to pad the util could help. But it will in no way help your DTI or positively impact your credit the way you described your situation.
@tbenz6876 wrote:OKay my wife and I started the house buying process. THe loan officer called today and said we were pre approved since my wife's middle score is 739 and mine is 705. He told us though to open 2 new credit card accounts to push us over that 740 line. Has anyone heard of this. Our DTI ratio is 32% since we don't carry credit card balances and only have a car payment and a unsecure loan currently open. We have credit cards just with $0 balances. We use them every 6 month and put like $5 on them.
Since the loan officer told us this what are the best 2 cards to open that have the best effect on the score. I know that opening some accounts actually is bad for the score so I wanted to reach out the community and see what you all had to say.
That sounds like some bad advice to me. I have yet to have opening a credit card increase my score, in fact the immediate effect on scores is a decrease (likely due to drop in AAOA), after 2-6 months it can increase it but not in the short term, especially not 35 points (mortgage are based off the lowest mid score when applying jointly).
My advice is:
1) go to the mortgage forum here and ask there if this is sound advise. There are several experienced loan officers that frequent that forum and can provide more insight than I can.
2) take the credit report your lender pulled and go talk to another loan officer, when I was mortgage shopping I was able to take my credit reports to several loan companies and have them give me options before they pulled my credit