There are few things home buyers need to be careful of before closing on their home. Be careful of paying off or settling collections and closing revolving accounts, auto loans, or student loans. Another thing to keep in mind is to be careful about opening new accounts or adding balances to cards, therefore increasing your overall debt balances and debt to income ratio.
Key Takeaways:
- It doesn’t make sense, but paying off an old collection can actually lower credit scores.
- There are plenty of times that underwriters require borrowers to pay off collections.
- Revolving balances compared to credit limits account for 30% of a credit score.
“So closing revolving accounts reduces the available credit and can lower a score.”
http://teammovemortgage.com/2016/10/16/credit-mistakes-avoid-prior-closing/
Alliance Credit Counseling
8000 Corporate Center Dr Suite 114
Charlotte, NC 28226
(704-341-1010) / (704-341-1010)