If you’re thinking of buying a home, consider these when it comes to credit…

1. DON’T DO ANYTHING TO RAISE A RED FLAG WITH THE CREDIT SCORING SYSTEM. This includes co-signing on a loan, changing your name or address with the bureaus, updating any creditor information. The less activity on your credit report during the loan process, the better.
2. DON’T APPLY FOR NEW CREDIT. We all see those “You have been pre-approved” invitations either in the mail or online, but just applying for new credit will bring a credit pull which will lower your credit score immediately, anywhere from 1 to 20 points.
3. DON’T PAYOFF COLLECTIONS OR OTHER ACCOUNTS WITHOUT TALKING TO YOUR LOAN OFFICER FIRST. Unless you are required to do so for the loan, don’t pay off any adverse credit.  Doing so will lower your score immediately by making an old adverse account a recent one.
4. DON’T MAX OUT OR OVER-CHARGE YOUR CREDIT CARD ACCOUNTS. This is one of the fastest ways to drop your credit scores, by as much as 50-100 points. Ideally, your credit card balances should be around 30% of your available limit. When you charge your account higher than that percentage, your balance-to-limit ratio gets higher, and your score goes lower.
5. DON’T CONSOLIDATE DEBT. When you consolidate several cards by loading your debt onto just one or two cards, you are affecting your overall balance-to-ratio on all of them. You inhibit potential payment history on the zeroed accounts, and appear maxed-out on the others. See #4. If you want to save money on interest rates, wait until after closing.
6. DON’T CLOSE OUT ANY NEW CREDIT ACCOUNTS. Two Reasons. One, when you close accounts, you lose “available” credit, which affects your overall balance-to-limit ratio. Secondly, closing an account reduces your overall length of credit history, since it will effectively ignore the good credit history you’ve maintained on that account in regards to your score.
7. DON’T MAKE ANY LATE PAYMENTS. Stay current on all of your payments. Once your payment goes 30 days late, your score can drop 50-100 points, and that can takes months, if not years to recover from.
8. DON’T LET ANY ACCOUNTS GO PAST DUE – NOT EVEN 1 DAY! Most of your credit cards allow a grace period, but what the don’t tell you is that once your due date passes, they will show your account is past due, even during that grace period. Past due balances can lower your score by up to 50 points.
9. DON’T DISPUTE ANYTHING ON YOUR CREDIT REPORT. Accounts that are listed as under dispute on your credit report are hidden from the credit scoring mechanism, resulting in a false score. When an underwriter sees a disputed account, they will require the dispute removed and a new report to be pulled.
10. DON’T INCREASE YOUR DEBT LOAD. Any new debt will affect your loan application, by increasing your debt-to-income ratio, and could affect your loan approval. Don’t charge new furniture or appliances until after closing.

Go to www.outputprescreen.com at least 48 hours before you apply for your loan!

On June 1, 2010, Fannie Mae implemented a new rule which requires a supplemental credit report to be pulled right before closing to make sure the borrower’s credit situation has not changed since the initial application. Any new inquiries or new debt will need to be explained and considered, whether or not a loan commitment has already been issues.

Special Thanks to Katie Karr, Senior Loan Officer, Bank Star, 22 Years Experience, NMLS#263796 k.karr@bank-star.com

Contact The Schrimpf-Gum Team with Prudential Lake Ozark Realty for your buying and selling real estate needs. Call: 888-366-6266 Email: Info@DemandDonna.com. Also Search the MLS at Donna.PruLakeOzarkRealEstate.com