Maintaining Good Credit While Purchasing a New Chicago Home

how shopping impacts credit scoresYou’re buying a Chicago new home, and you’re far enough along in the process to have your loan application approved. In a recent post on the
Equifax Personal Finance Blog,  real estate expert Ilyce Glink reminds us that now is not the time to party. You need to do everything you can to protect your credit before the loan closes.
Glink’s article, “
Why Mortgage Lenders Pull Your Credit History Twice,”  is a stark reminder that the weeks between loan approval and closing are not an opportune time to work ahead and get a credit card at your favorite home improvement store.
Glink shares the impact on her own credit score of opening a simple retail credit card. Though her credit history was previously well established, opening the card still caused a 30 point drop in her score. And she even paid it off by the end of the month! It took her six months of good behavior to get her score back to its previous level.
When you’re in the process of buying a home, that kind of time is not available. Lenders will definitely re-check your credit before the closing, so your credit reports need to stay the same at a minimum or, even better, improve.
Of course, lenders will look at your tax statements and account balances, too, so be ready to explain any abnormalities, even if it’s a large deposit. Glink reports in her article that even people with near perfect credit scores have been turned down in the current lending environment because of unexplained deposits or small investment losses. (And what investor hasn’t experienced a loss in recent years?)
What can you do while you’re in the no-man’s land between qualifying and closing? It’s a good time to pack. Or peruse decorating magazines. Or check out the
Equifax Personal Finance Blog. It won’t cost you a penny, won’t harm your credit and may even make a huge, positive difference in the way you handle your finances.