Credit Card Programs - Strategy/tips for someone getting their first mortgage next year

Hi FTers. For some background, we are planning to buy our first house/condo at some point in 2013 and my spouse does not have a great credit score (very limited credit history - no negative records, but just had one credit card). My scores are decent (730 at TransUnion, 770+ at the other two) but I have never had any kind of debt/credit other than credit cards. To try to remedy this, I have got an extremely small personal installment loan from my bank which autodebits from my checking account to try to add some additional sources of credit. Again, never had any auto loans, mortgages, or student loans before.

My record is extremely clean with no negative records and I have about $55,000 in available credit. The plan is for me to apply for the mortgage myself without my spouse on it.

From an income perspective, as I am primarily in sales, I have variance in my annual income. Our personal banker told me that they would look at a few years of W-2 history - every year in the last 4 years has been a good year but 2012 will be a particularly strong sales year as I've been quite fortunate this year. Thanks to this year and saving well, we have the ability to make a substantial down payment on whatever property we purchase - likely able to put down 30%. We do live in downtown Chicago so property prices are high in the area.

I currently have my original Citibank Thank You Preferred Card (6 years old), Chase Freedom (4 years old), Chase United MP Explorer (Jan 2012), and Chase United Club (June 2012). I also closed out my old Chase Southwest card earlier this year as my travel switched from WN to UA this year due to international travel.

My understanding is that at this point, I should not apply for any additional cards? Could you please advise? The only additional card I had in mind was the Chase Ink Bold as I may be starting a new business.

Thank you in advance for your guidance.

Bueller?

I'm not so sure opening another credit card will definitely send you down the rejected path of a mortgage loan application. Opening cards does cause some dings on your credit score, but they fade away after some time. Opening more causes more. There's a complicated pattern recognizer that's run to determine your credit score based on what you do with your finances, and it's not as simple as one card will cause you to not get a good rate or not.

That said, I have opened cards before my loan applications and was accepted, but I'm sure there are a lot of other factors that are also very important in determining your mortgage application's risk, such as income, years of income, assets, outstanding debt, stability of job, credit score, etc...

I don't know how much you will or will not be extending (overextending) yourself with your purchase, but if the monthly payments are about a fifth or maybe a quarter of your monthly income, that should be an easy one. I qualified with half of my income when I got my first mortgage, and I had 0 years of previous income, but that was during the days when banks were very lax on this stuff.

Hi FTers. For some background, we are planning to buy our first house/condo at some point in 2013 and my spouse does not have a great credit score (very limited credit history - no negative records, but just had one credit card). My scores are decent (730 at TransUnion, 770+ at the other two) but I have never had any kind of debt/credit other than credit cards. To try to remedy this, I have got an extremely small personal installment loan from my bank which autodebits from my checking account to try to add some additional sources of credit. Again, never had any auto loans, mortgages, or student loans before.

My record is extremely clean with no negative records and I have about $55,000 in available credit. The plan is for me to apply for the mortgage myself without my spouse on it.

From an income perspective, as I am primarily in sales, I have variance in my annual income. Our personal banker told me that they would look at a few years of W-2 history - every year in the last 4 years has been a good year but 2012 will be a particularly strong sales year as I've been quite fortunate this year. Thanks to this year and saving well, we have the ability to make a substantial down payment on whatever property we purchase - likely able to put down 30%. We do live in downtown Chicago so property prices are high in the area.

I currently have my original Citibank Thank You Preferred Card (6 years old), Chase Freedom (4 years old), Chase United MP Explorer (Jan 2012), and Chase United Club (June 2012). I also closed out my old Chase Southwest card earlier this year as my travel switched from WN to UA this year due to international travel.

My understanding is that at this point, I should not apply for any additional cards? Could you please advise? The only additional card I had in mind was the Chase Ink Bold as I may be starting a new business.

Thank you in advance for your guidance.

i just got a loan recently.. sound like you are self employed like i was.. in my case they took the avg of the last 2 years of income and had to give them my complete tax forms.. when getting a home loan the score is the most important thing.(middle score). you will have to explain any recent inquiries they want to know if you have any new account with a monthly payment.. $0 credits cards should show $0 monthly payment and should not effect you.. so stop using some it might take a bit to show that $0 payment. all those $20-$40 min payments add up into your debt to income ratio.. my score was 740ish and my wife was 700ish... i had alot of inquiries and they didnt even look at it... i guess they figure that you score already reflects your inquiries so if you are 740 with 20 inquiries.. then your score is 740... i got a room to go account before i closed and it popped up when they did a refresh.. even tho the account didnt show up on my report they wanted all the details to include it in the DTI.. they will call the creditor to get this info... it was a pain because when they called the items were not shipped so the balance was $0.. they were able to see my receipts and my available balance and my credit terms to confirm my monthly payment.. it was a big pain.. so i would say DO NOT add any accounts or inquiries starting NOW!

Thanks for the responses. It sounds like I will have to hold off on getting the Chase Ink Bold and keep my business purchases on either the Chase Freedom (for 5% categories) or Chase United Club Card (for everything else to get the 1.5 miles per $) until the mortgage application is complete.

For further color, I expect on just my income alone to keep the mortgage payments below 30% of income in "bad" year.

Maybe get some low level cards for your wife to start building her credit? Freedom and Forward come to mind.

Stop focusing on credit score and hard pulls and start focusing on all of the other metrics as well. Listen to your mortgage broker carefully. If you've got good credit -- 800+ -- and are putting down 30%, you've hit the two main signposts.

But, credit churn is a bad thing in the secondary mortgage market and that means your lender will find it harder to sell and will thus either deny credit or charge a higher rate.

If you need credit for a reason, don't stint yourself. But, be prepared to document to the lender exactly how and why you did it. Again, your mortgage broker is earning a fee, use him for advice.

my wife moved here to the USA 2 years ago.. when she first got here i added her as an authorized user on my credit card using her SSN.. when i look at her report the cards i added her to showed complete history of those card... history that pre-dates her SSN.. within 6 months of doing that she was approved for a citi aadvantage card with a $6500 limit... year later we bought the house her middle score was around 700.. i suggest adding your wife as authorized user.. make sure you give them her ssn.. i think thats the only way they can report it.. it atleast worked with the 2 capital one cards i had at the time

gezzuzz - thank you. I am going to do that.

Thanks everyone for the great advice.