Credit Issues to Avoid Prior to a Mortgage

Thinking about buying a home or refinancing in the near future? Be aware of certain things to avoid prior to applying for a mortgage which can affect your chances of qualifying,

Most common issues to avoid:

* Do not apply for any new credit cards before getting a loan
* That includes not opening new accounts to transfer credit balances
* Avoid running up credit card balances, but reduce them instead
* Don’t buy a vehicle that requires getting new a loan financed
* It is not a good idea to close any accounts with or without a balance
* Do not allow any payments to go over 30 days late or to collection

* Amount of time since accounts were opened
* Number and type of accounts with balances
* Proportion of current balances to credit limits
* Number of late payments over 30 days past due
* How long delinquent accounts were past due
* Bankruptcy, judgments, liens, collection accounts

If you plan to buy a home in the near future, there are certain things to avoid during the 2 to 3 month period prior to applying for a loan that can reduce your credit score, which could affect your chances of qualifying, plus raise the rate and your monthly payments.

Credit formulas use a variety of data in a to calculate a score. Major items that can change your scores include:

* Amount of time since accounts were opened
* Number and type of accounts with balances
* Proportion of current balances to credit limits
* Number of late payments over 30 days past due
* How long delinquent accounts were past due
* Bankruptcy, judgments, liens, collection accounts

Check for errors on your credit report and dispute the accuracy if you find any. Consumer disputes must be investigated by the credit reporting agencies within 30 days of reporting an error. If the derogatory information cannot be confirmed by the source during that time period, it must be removed from your report, which could boost your score.

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