FICO SCORE

[Anonymous]

Hi out there  I am confused and worried.  I am in the process of purchasing a home and I did not know that I was not supposed to touch anything on my credit.  The lender said that I needed to pay off some accounts and he used a simulator.  He said that it would add 26 points to my score, so I paid them all off.

But I applied for a line of credit at a furniture store, because I thought I was closing in a few days but we did not.  So now when he ran my credit before that line of credit was not on there.  I am worried now .  I was going to close it because I opened it this month, but I was told not to, it has a zero balance because I do not want to use it. When they runs it again how many points will my FICO score drop if any ?? 

[RobertEG]

Opening new lines of credit while under the mortgage app process is usually a no-no a few reasons.  It can reduce your average age of accounts (AAoA), and add a new inquiry to your CR, both of which can hurt your score, and it additionally shows the prospective lendor that you are seeking more credit that can lead to more debt.

It makes them wonder what you are doing, and does not give them a static view of your credit activity.

Mortgage lendors do manual reviews of your CR, and dont look only at the three digit FICO score.

If the furniture store is not reporting to a CRA, it wont show in your credit score at all, and thus wont be a factor.

Message Edited by RobertEG on 09-24-2009 10:48 PM

[Anonymous]

It's also not unusual for credit reports to be reviewed just before closing to verify that the scores have not dropped or actions which the bank would consider risky have not occurred. The loan officer should have reminded Tazmanian not to take any action that could negatively impact the credit scores.

Closing the furniture store account won't erase the effect. If the furniture store account does report to one or more of the CRAs, there may be a positive utilization effect from the added CL, but probably a larger negative effect from the inquiry, a new account, and reduced average age. In addition, furniture store accounts are often categorized as consumer finance, which can have a slight negative effect on the credit scores ...