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Looking to add another cc or 2, but there is 70% chance applying for mortgage

socalchef00
Established Member

Looking to add another cc or 2, but there is 70% chance applying for mortgage

Hey Gang,

 

I am looking to add 1, at most 2 new credit cards shortly. Just waiting for paid off cards to post new $0 balances. Maybe a month.

Once those post, I'll have an overall utilization of 5% and average credit age of about 6 years. Total Credit Limits of $66,470 with only about $9k used.

Currently I have hard inquiries of : 

Trans : 8/24 (4 of which are 2020)

Equifax : 5/24 (3 of which are 2020)

Experian : 13/24 (6 of which are 2020)

 

My question is, if I were to open 1 or 2 new credit cards in the next month or two, would that affect any determination in mortgage qualifications in 3-4 months?

: $500, : $3,000, : $7,000, : $2,000, : $2,800, : $6,750, : $12,500, : $2,000,: $2,500, : $5,000, : $6,200, : $2,000, : $3,000, : $1,200, : $1,500, : $2,500,: $6,000, : $6,000, : $1,700
TransUnion FicoScore 8 : 690
EquiFax FicoScore 9 : 669
Experian FicoScore 8 : 795

Total Credit Limit Of : $74,150
Avg Cr Age : 5 Yrs., Oldest card : 17 years, Youngest card : 1 year
6 REPLIES 6
Pony4her
Regular Contributor

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage


@socalchef00 wrote:

Hey Gang,

 

I am looking to add 1, at most 2 new credit cards shortly. Just waiting for paid off cards to post new $0 balances. Maybe a month.

Once those post, I'll have an overall utilization of 5% and average credit age of about 6 years. Total Credit Limits of $66,470 with only about $9k used.

Currently I have hard inquiries of : 

Trans : 8/24 (4 of which are 2020)

Equifax : 5/24 (3 of which are 2020)

Experian : 13/24 (6 of which are 2020)

 

My question is, if I were to open 1 or 2 new credit cards in the next month or two, would that affect any determination in mortgage qualifications in 3-4 months?


Greetings - I have found an interesting article on a my Fico education forum:

 

  1. New credit applications trigger "hard" inquiries. When you apply for credit or a loan, the lender, credit card issuer, etc., will pull your credit report and FICO® Scores from any or all three bureaus. This shows up as an inquiry on your credit report. A hard inquiry is an inquiry authorized by you when you apply for credit (compared to a soft inquiry, which is an inquiry triggered when you pull your own credit report or when your credit report is pulled without you authorizing it by applying for credit).

Hard inquiries typically ding your FICO Scores by only a few points, but if your scores are hovering around a lender's "break point"—say you have FICO Scores just above 700, and a particular lender will bump your interest rate if it drops below that—then that's a score hit you can't afford to take. Inquiries stay on your credit reports for two years, but FICO Scores only consider inquiries from the past twelve months—avoiding new credit applications a full year before you apply for a mortgage might be the best option if you want to maximize your scores.

  1. New credit accounts will lower your average account age. Your FICO® Scores also consider the average age of your accounts. The longer you've had an account in good standing, the better. Of course, there's a flip side to this. Let's say you've had a credit card, paid as agreed, for five years. Opening a new credit card account will cut your average account age in half, which can lower your FICO Scores. New credit only makes up around 10% of your scores, but giving yourself the best chance at a mortgage approval with good rates requires optimizing every last bit of your credit profile.

Thought this was beneficial to me, of course others will chime in with their experiences.  Good luck on your future home.

Message 2 of 7
dragontears
Valued Contributor

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage


@socalchef00 wrote:

Hey Gang,

 

I am looking to add 1, at most 2 new credit cards shortly. Just waiting for paid off cards to post new $0 balances. Maybe a month.

Once those post, I'll have an overall utilization of 5% and average credit age of about 6 years. Total Credit Limits of $66,470 with only about $9k used.

Currently I have hard inquiries of : 

Trans : 8/24 (4 of which are 2020)

Equifax : 5/24 (3 of which are 2020)

Experian : 13/24 (6 of which are 2020)

 

My question is, if I were to open 1 or 2 new credit cards in the next month or two, would that affect any determination in mortgage qualifications in 3-4 months?


What is more important to you, a new credit card or the best rate on a mortgage? 

 

A new account will not automatically interfere with getting approved for a mortgage; however, new accounts tend to hit mortgage scores pretty hard so unless you have room in your mortgage scores to buffer the new account score drop you may end up in a higher interest rate tier and pay 10s of thousands of dollars more over the life of the loan. 

Scores hover around 800
Haven't been AZEO in over a year
Rome was not built in a day, neither is a good credit profile
Message 3 of 7
socalchef00
Established Member

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage


@dragontears wrote:

@socalchef00 wrote:

Hey Gang,

 

I am looking to add 1, at most 2 new credit cards shortly. Just waiting for paid off cards to post new $0 balances. Maybe a month.

Once those post, I'll have an overall utilization of 5% and average credit age of about 6 years. Total Credit Limits of $66,470 with only about $9k used.

Currently I have hard inquiries of : 

Trans : 8/24 (4 of which are 2020)

Equifax : 5/24 (3 of which are 2020)

Experian : 13/24 (6 of which are 2020)

 

My question is, if I were to open 1 or 2 new credit cards in the next month or two, would that affect any determination in mortgage qualifications in 3-4 months?


What is more important to you, a new credit card or the best rate on a mortgage? 

 

A new account will not automatically interfere with getting approved for a mortgage; however, new accounts tend to hit mortgage scores pretty hard so unless you have room in your mortgage scores to buffer the new account score drop you may end up in a higher interest rate tier and pay 10s of thousands of dollars more over the life of the loan. 


I'll have to pull my mortgage scores and see where I am at before making the decision

: $500, : $3,000, : $7,000, : $2,000, : $2,800, : $6,750, : $12,500, : $2,000,: $2,500, : $5,000, : $6,200, : $2,000, : $3,000, : $1,200, : $1,500, : $2,500,: $6,000, : $6,000, : $1,700
TransUnion FicoScore 8 : 690
EquiFax FicoScore 9 : 669
Experian FicoScore 8 : 795

Total Credit Limit Of : $74,150
Avg Cr Age : 5 Yrs., Oldest card : 17 years, Youngest card : 1 year
Message 4 of 7
TXPocohontas
Contributor

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage

Short answer, yes.

 

I can tell you from experience (currently having house #2 built) that not only will the new card(s) lower your score for a month or two, but you would have to explain why you took out the card(s) right before applying for that mortgage.  

 

If you really want a house/mortgage, hold off until after your purchase and close on your mortgage loan.  Then it will not matter anymore.

Starting Fico 8 Score Dec 2019: 469 TU 501 EQ 453 EX
Current Score: 782 TU 759 EQ 780 EX
Goal Score: 820 Across the board
 
Message 5 of 7
socalchef00
Established Member

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage


@TXPocohontas wrote:

Short answer, yes.

 

I can tell you from experience (currently having house #2 built) that not only will the new card(s) lower your score for a month or two, but you would have to explain why you took out the card(s) right before applying for that mortgage.  

 

If you really want a house/mortgage, hold off until after your purchase and close on your mortgage loan.  Then it will not matter anymore.


Thanks, that's what I was afraid of

: $500, : $3,000, : $7,000, : $2,000, : $2,800, : $6,750, : $12,500, : $2,000,: $2,500, : $5,000, : $6,200, : $2,000, : $3,000, : $1,200, : $1,500, : $2,500,: $6,000, : $6,000, : $1,700
TransUnion FicoScore 8 : 690
EquiFax FicoScore 9 : 669
Experian FicoScore 8 : 795

Total Credit Limit Of : $74,150
Avg Cr Age : 5 Yrs., Oldest card : 17 years, Youngest card : 1 year
Message 6 of 7
4sallypat
Established Contributor

Re: Looking to add another cc or 2, but there is 70% chance applying for mortgage

I was in a similar situation just before my mortgage loan closed.

 

After searching for houses over a year in So Cal - being dumped, duped, over bid, out countered, cash in full offers, etc....

Mortgage broker and realtor kept up with periodic updates on income, CRA, etc - and 80 houses later one popped up in October, we put in an offer and got it.

 

When the X1 card came out in early October and got an early invite, I jumped on it and luckily at that time, the bank did not do a HP.

Approved for the card with only a SP, and it did not report until 3 months later after my mortgage closed.

 

I also got a business card on a SP (Citizen's Business) prior to escrow which did not affect my personal credit and since business cards do not report to personal, no one knew.

 

Even all the way to last day before the loan funded, they ran a SP on our credit and nothing had changed so I got lucky I guess!

 

Message 7 of 7
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