Escrow is now open!
Congratulations, you are in contract. Now you are thinking about all of the things you want to buy for the house. And then you see; Buy Today! 24 months 0% interest! Buy one, get one free! Ignore the chatter, stay the course, and don’t get distracted! DO NOT BUY CARS, APPLIANCES, OR FURNITURE DURING AN ESCROW! Do not apply for an additional 10% savings at a department store. No matter how sweet the deal is, just don’t do it! A credit inquiry can kill the loan for the house.
Mortgage applications require an initial credit inquiry and a final “soft pull” just before closing. Any unusual activity in between the 2 credit reports can delay closing or cause cancellation of escrow. If there are recent credit inquiries on your credit report, we will need to document the terms and determine if new debt has been established.
Credit Behaviors and Best Practices:
Balance transfers, high revolving balances, multiple credit inquiries, and unusual patterns can all trigger a reduction of credit score. Credit scoring is based upon past behaviors and predictable out-comes. Stay consistent with credit use. If you can, pay-off balances monthly. Maintaining good credit is like exercise or working-out. It takes discipline and hard work! Don’t close out old credit cards. Length of time of use of credit is important for credit scoring. If you have kids, get a secured credit card in their name to build their own credit identity throughout their high school/college years.
Derogatory Credit and Remedies:
Charge offs, late pays, delinquencies, erroneous reporting…There are reputable credit repair and credit counseling companies and sometimes this is needed for a client. If you prefer to save a few hundred bucks and tackle the tasks yourself, expect 30-60-90 day procedures…In this day and age, most people do not have the time to sit on the phone for sometimes hours at a time fighting with creditors. If you request a correction in writing, the reporting agencies have 30 days to respond and another 30 days to investigate and before you know it the house of your dreams has slipped away. As a lending professional, I have access to rapid rescore. Rapid rescore allows for quick credit corrections or adjustments which can increase credit scores in just a few days. Rapid Rescore is not “credit magic” and we cannot undo 10 years of credit mismanagement! If you have charge offs or collections, pay them off through escrow and request a letter of deletion to send to the credit bureaus.
My recommendation would be to consult a loan professional or credit counselor that you trust. You can always ask your Realtor for recommendations on who can best help you weigh your options and guide you through the practical solutions available to you. Best of luck!