Today I’ve got some valuable credit advice for anybody who is thinking about getting a mortgage or refinancing their current mortgage in the near future.
All of the major credit cards report to the three major bureaus: Transunion, Equifax, and Experian. Credit cards have different limits, but whatever the limit is, the rule of thumb is to keep your balances below 30%. If your debt is any higher, it will affect your debt-to-income ratio, which will affect your credit score and your monthly payment.
Even if you have a 0% interest card, it’s important to keep the total balance of all your credit cards under 30%. If you have multiple cards and are considering consolidating them into one, I would discuss it with a loan officer in advance of qualification.
If you want to use part of your loan approval to pay off debt on a card, we can do what’s called a credit supplement. We have a partner that can call the creditor with the data to verify that the payment has been made and the resulting balance is $0.
Your loan approval is based on the picture of your credit at the time of qualification. Keep in mind that if you make any credit purchases or open any new cards after qualification, it’s vitally important to keep your loan officer in the loop. Some lenders do a soft credit score pull prior to closing as a final check on your eligibility. Taking on new debt so soon after qualifying could put your entire mortgage in jeopardy.
If you have any questions about credit in the mortgage qualifying process or anything else about mortgage loans, don’t hesitate to give me a call or send me an email. I’d love to hear from you.