Credit before morgage

[Anonymous]

I'm working on my credit in hopes of selling my current home and purchasing a new one.

I currently have one credit care from discover. It is due to graduate next month (hopefully).
A student loan that is deffered.
Morgage on my current home.
My credit score is in the early 600's
I have 2 collections remaining on my report that have been paid off already. Hoping they will fall off in the next couple of weeks.
I also have an unpaid charge off.. 12000 . I'm saving for a settlement in case I have to pay it to qualify for new morgage.

My wife is a member of Navy federal credit union. I want to become a member as well, but I'm worried about the hard pull. I'm interested in their credit card and auto loans. I'm not sure I stand a chance with either with my score. I'm hoping with deletion of two collections! My credit score should come up some.

My question is... should I open a navy federal account. That would be a hard pull 6 months before applying for morgage. It would also be another hard pull for credit card application. I just want to get my foot in the door and build a relationship with them so that I can apply for auto loan as well.
What would be your recommendation? Leave it alone until after morgage or start relationship now and risk 1-2 hard pulls?


I want to add another credit card to the mix.

[Anonymous]

Are you even pre-approved with that profile? Of course, you want to wait until you get the mortgage and wait until after closing when they do the second check before going on an app spree.

[Anonymous]

No. I'm waiting until my score increase. Hopefully in 6 months I'll have a decent score since everything is paid off except 1 charge off.

[KatieKatie]

Hi, my experience is the opening of accounts that far in advance of your mortgage will not prevent your mortgage. The related factors could however such as if you incur debt on the new line - now that’s a factor for your DTI ratio, if you have few or relatively young accounts there could be an adverse impact to your score because the average age of your accounts could significantly decrease and date of your youngest account will be affected; obviously the impact of the inquiry could have an effect, hopefully minor... Conversely, if you don’t have certain types of credit like an installment or even open revolving accounts, opening an account that’s used responsibly could help in that regard...so in essence I don’t think the fact that you opened an account will be a disqualifying factor in and of itself, but if the net effect is that the score drops because of it correlated factors, I guess it could delay you.

If you post more details about your credit profile like details about each of your open accounts, negative items on your report, time since last delinquency, # of inquiries in the last 12 months, AAoA, & AAoYA one of the experts in the forum can likely give you more specific guidance.

[CreditInspired]

If you’re planning to apply for a

mortgage in 6 months, dont apply for anything. Dont do anything that would cause a HP!

Also, that $12K chargeoff is huge. Have you discussed with CA a PFD, or negotiated a reduction in amt owed, or setup any type of repayment arrangement? I think this large amt will affect your ability to get a mortgage if not paid. 

[Anonymous]

I've discussed a settlment of 50%... I'm trying to lower it. I'm prepared to pay it if need be.

[Mortgage-Specialist]

This charge off will have literally zero impact. This will not hurt your chances of approval nor will it impact your interest rate. I cannot speak for every lender but that is how we view charge offs.

The fact that its "charged off" means they are no longer seeking repayment so you'd be better off lighting $12,000 on fire than paying them back.

[Anonymous]

That's exactly what I wanted to hear!!!

[Mortgage-Specialist]

So you think someone should pay 12k when they dont have to? When the 12k debt was already written off by creditor? When its not a judgement and going automatically going ro fall of the credit report on its own? When his has no impact on approval and rate?

This advice seems rather odd.

[Anonymous]

The CO is the last thing to worry about. Improving your scores, trying to PFD or GW off the collections, diversifying your file, etc will go a lot further.