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credit cards before applying for mortgage

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Anonymous
Not applicable

credit cards before applying for mortgage

I'm not sure so I told my friend I would ask 4 her.OK she wants to apply for a mortgage in april but close in june before the FTB credit runs out she's ok with her score's.She wanted to know if she applied in feb for cards will that hurt her in april
Message 1 of 8
7 REPLIES 7
Lel
Moderator Emeritus

Re: credit cards before applying for mortgage

Bad, bad, bad idea.  Inquiries, new accounts, decreased average age of accounts all add to up to a lower score.  Not only that, but lenders these days may not look favorably at someone who's seeking credit right before obtaining a home.

 

Why take the chance?

Message 2 of 8
Anonymous
Not applicable

Re: credit cards before applying for mortgage

Lel

will they deny her for a mortgage.How long should she wait to apply for a mortgage then

Message 3 of 8
Lel
Moderator Emeritus

Re: credit cards before applying for mortgage


divakay2 wrote:

Lel

will they deny her for a mortgage.How long should she wait to apply for a mortgage then


Impossible to say whether this action will lead to an outright denial.  But if it's going to have an effect, it's almost definitely going to be negative.  If her scores are in the low 600s right now and she loses a dozen points because of the new account, then it could lead to a denial.  If she has high FICO scores and enough money for a hefty down payment and a conventional (i.e. non-FHA) loan, then a score drop could exclude from her getting the best available rates and would cost her thousands in extra interest payments over the life of the loan.

 

This must be one heckuva credit card for someone to be willing to risk a mortgage and missing out on the first-time homebuyer's tax credit.

Message 4 of 8
Anonymous
Not applicable

Re: credit cards before applying for mortgage

Additionally the minimum payment will affect her debt to income ratio.  May not be an issue if she's planning to stay well within the normally allowed range, but worth considering.
Message 5 of 8
Rum_n_Raisins
New Member

Re: credit cards before applying for mortgage

i'd advise her to wait. it's not worth risking the points.

Starting Score: EQ:600 -02/02/2010 TU:637-02/16/2010
Current Score: EQ:624 TU:665-02/28/2010
Goal Score: EQ and TU:650+ -First time mortgage, here I come -03/30/2010


Take the FICO Fitness Challenge
Message 6 of 8
Anonymous
Not applicable

Re: credit cards before applying for mortgage

When I started looking in to the mortgage loan process, I realized I didn't have any accounts that were "clean", meaning they all had some lates. I wanted to start fresh with a new credit card. I knew it would be more than a year before applying for the mortgage so I applied and received a new CC with 2k credit limit. I had a score of 589. When the inquiry and new account showed up on my reports, I lost 23 points! I gained most of them back after 6 months. So long story short...odds are you friend will lose points. Don't risk it!
Message 7 of 8
DallasLoanGuy
Super Contributor

Re: credit cards before applying for mortgage

for a person with a 740 fico.... likely no problem. if i get a new credit card my score doesnt move.

 

for a person with 640 fico, bad idea.

 

 

Retired Lender
Message 8 of 8
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