THE DON’Ts:
- Don’t apply for ANY new credit or open new accounts unless absolutely necessary.
- Be careful applying for credit with department stores and gas companies. These are single purpose credit cards accepted only by the merchant who distributes them. As such, department store credit and gas cards are considered as low quality credit.
- Don’t pay off collection accounts before talking to a lender! Paying off an old collection account that has not reported in over 2 years can lower your credit score.
- DO NOT dispute an account with the credit bureau when considering purchasing or refinancing a home. Disputed accounts must be settled and of record with the credit bureau prior to the loan being underwritten.
- Don’t assume that being one day late on a payment is OK. Credit card accounts and second mortgages such as Home Equity Lines of Credit typically do not have a grace period and will report you late to the credit bureau.
- DO not close credit cards at all, with the following exceptions: closing a joint account after a divorce, removing your name from an authorized user account that has incurred negative history or has high balance-to-limit ratios, or in the case of identity theft.
Thanks to Ron Draluck, MBA, Certified Mortgage Planner, Fidelity Mortgage
