Can I apply for new credit if I want a mortgage in a few months?

[stlacct]

My scores the last time I checked were at Ex:620, Tu:629, Eq:671

This was at about 50% DTI on the 2 credit cards I have. I have since paid the majority of this off but it has not reported and I'm hoping paying them down will increase my scores some.

I currently have an auto loan that was opened in June of 2013. The interest rate is rather high, and I can now get a rate quite a bit lower through my CU. The drop in interest would save me about $65/mo on my payment. Would I have difficulty getting a mortgage in 5 months or so if I refinance this?

The two credit cards that I currently have are both from Capital One and have low limites (700 and 500). I believe I am preapproved for a Discover card and would like to get one if so. Would opening this cause difficulty when getting a mortgage in a few months? Most of my credit is fairly new. I have an auto loan from 05 that was paid off in 09, but my credit cards were opened in 3/12 and 7/13.

My boss also wants to get me a card on his Amex account, and if I did that I would have no reason to open another credit card. How would it effect my credit to be an authorized user on this account? It's a personal account, not our business account. if it matters. I'm a little concerned as it apparently has no limit and I'm not sure what a lender would think if they pulled my credit and there was an Amex account with a $200K balance (because I would not be suprised if he bought a car or something with it).

We would like to buy at the end of July or beginning of Auguest as my son will start school and it would be nice to have bought something by then.

[J_G]

I wouldn't because your scores are borderline for mortgage approval and you will definitely see a drop when those new trade lines report. They say you want 12 months between New credit and mortgage app. I got new credit last April and have had to wait now to apply for my mortgage my scores were around your scores and it took from April until October to rebound. Hope this helps

[Plasticard]

All this is my personal experience, so just a thought for you to help make your decision. 

I just recently got a mortgage last year in August. However, my whole mortgage process started in June of last year as well. I had just opened two credit cards (Discover and Chase) as well as refinanced a car loan all in March of the same year. I know this goes against everyone saying here about not getting any new credit 6-12 months prior to getting a mortgage. I didn't experience any problems when my lender pulled all three reports for my pre-approval. Only thing the underwriter needed was just a sheet that showed my two new tradelines and why I opened them. All I said was that I wanted to expand my credit line and wanted the rewards the cards offered. 

As for my car refinance, this helped me a lot since I saved $70 on my monthly payment. This definitely helped me on my DTI ratio to qualify for a higher mortgage loan. I'd say a big downside however, was my score drop of about 40 points. This made me have to pay slightly more on my mortgage insurance, however getting the higher loan amount was more important since the mortgage insurance would go away eventually. 

With more months between you and your mortgage, maybe your score will be able to rebound quicker? Also since you've paid off all your credit card balances, your score should get a tiny bump as well. Don't know if this spiel will help you at all, but seems a little similar to your situation with regards to refinancing and new credit lines. 

[StartingOver10]

I agree with Plasticard above.

Each credit file is different so if you obtain new credit the impact on your scores is not the same.

The mortgage lender doesn't say wait 6 to 12 months between applying for new credit before you apply for a mortgage. The lender will usually only ask for a letter of explanation for the new accounts. Now, if you go out and get several new lines of credit and immediately apply for a mortgage, that will look irresponsible to anyone reviewing your credit file (the underwriter).

[What is a real deal killer is if you go out while you are in getting mortgage approval and run up your credit card balance or purchase some large item that you financed. But you aren't talking about doing that (but I have seen people do it )]

But from your post, you only have two cards and one auto loan so one more cc and a refi on your auto loan to a much lower rate and payment makes sense.

Reducing your car payment by $65/month is a positive thing and will help you with your DTI (especially if it is borderline). The inquiry to refi your auto loan may impact your score temporarily, again it depends upon how many inquiries you have already.

If you are also able to pay off one card and bring down the balance on the other, then you will see your score increase.

EDIT: the only thing that I wouldn't do is have that credit line from your boss where he could run up the balance too high as that will affect your DTI if you are a joint card holder.

[Peter1142]

It is impossible to predict what effect a new account will have.

If you have a thin file, it can tank your score, especially multiple ones. When I opened 2 new accounts and my file was not hot I lost nearly 50 points and it took a year to fully rebound. It is not the inquiries that will tank a score, it is the new account ding that FICO does, which decreases over 12 months

If you have a thick file with a long established payment history, your score can actually increase, from reduced utilization and accounts with a balance and the mix of credit thing.

I could refinance my car payments for the last several months and saved nearly $75/month, but I am stuck waiting until after closing. A refinanced car account is also a "maxed out" installment account which is not nearly the hit of a maxed out revolver it is also another small negative in your score. $75/month is of course a significant amount of money to be completely throwing away, but compared to the total cost of buying the house, it is water under the bridge.

The best advice, I guess, is to refinance the car, open whatever other accounts you think are important, and then you will just have to wait as long as it takes until your score is in shape, hopefully it shouldn't be long. If you aren't willing to do that, then you need to wait.