When applying for a loan, as a homeowner or an investor there are certain things you want to avoid and certain things you want to make sure you do. You’ve applied for a loan on a particular property already. But now you’re in limbo. What do you do while you wait, and maybe more importantly, what shouldn’t you do? Here is a list of do’s and don’ts.
- Don’t apply for new credit. Don’t apply for credit anywhere else. Don’t buy a car, don’t get a new credit card. Don’t look at anything because it makes it seem to the lender like you’re overspending!
- Don’t pay off collections. The reason you don’t want to do this is because you want to make sure that you’re not changing a lot of things that the particular lender is looking at. Now if they come back to you and you’re not approved, you can start working on building that credit score.
- Don’t close credit card accounts. Again, this looks like you’re trying to change things to beef up your profile. Do this stuff before and after the process.
- Don’t max out or over charge your cards. Keep a ratio of no more than 50% on each card’s credit limit.
- Don’t consolidate debt to one or two cards during the loan process. Keep everything consistent! Change things later.
- Don’t raise red flags to the underwriter. Don’t cosign on another loan. And don’t move anywhere! It actually raises red flags if you change your residence during the process.
- Do join a credit watch program. I might talk more about credit scores in a future blog if there is interest.
- Do stay current on existing accounts. Don’t let things slide!
- Do continue to use your credit as you normally would. Don’t just shut down your credit. Keep using credit like you’ve typically been doing. Then it looks as though you are living life normally and handling finances in your normal way.
It’s important to tread carefully in the loan process. Before and after work hard to make that credit score awesome–but during the consideration process you need to continue your regular rhythm of credit.
What seems overwhelming to you when you think about loans? Scroll down and let me know in the comment section below–who knows, I might write a blog off of your question!
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