10 Things That Could Negatively Affect Your Application for Credit
There are several financial activities can change your approval for a mortgage, and some that may even disqualify you. Here are ten things that could negatively affect your application for credit.
- Making expensive purchases. Buying a new car, furniture, appliances or opening a new charge account adds additional payment liability and could impact the loan qualification.
- Getting a new job or reducing your hours. A job change may be okay but work closely with your loan officer to review changes prior to making a move. A reduction in hours causes a concern about income.
- Switching banks or transferring money. To eliminate potential fraud, most lenders require a thorough paper trail to document the source of all funds.
- Disregarding your lender’s requests for information. Lenders need copies of bank statements, W-2s, pay stubs, and other paperwork in a timely manner.
- Not making timely payments on credit card, installment or utility bills. The credit report has an expiration of 90 - 120 days depending on the loan program. A new credit report may be needed prior to the closing of your loan.
- Neglecting to list a debt or other significant item on the application. A review of income documents will often reflect other obligations such as child support or business expenses.
- Starting any new legal proceedings. Divorce, being a party to a lawsuit, new judgments and filing for bankruptcy are all found on court records and will be noted in the title insurance policy.
- Co-signing a loan for anyone. A recently co-signed loan may be calculated as part of your monthly debts and could impact loan qualification.
- Making large deposits to accounts if the money cannot be tracked on paper. Undocumented money can cause the whole account to become unusable for the transaction.
- Spending the money needed for closing prior to closing. Many times updated balances are requested on loans.
Before you make any purchases or employment changes, talk to your lender.
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