CC chasing and mortgage approval
 

Not sure if this is the right place for it. Move it if necessary

In the last 18 months, wife and i have applied for 20 or so credit cards between the 2 of us. Only got completely denied once. Had to talk Chase into another but it was very easy.

We are buying a house in the next 6 months or so and just got approved for a jumbo mortgage at the lowest rate possible. have cancelled a few of the cards in the last 6 months and lowered the credit line on most of them.

Highest of the 3 FICO scores for each of us was about 745 for me and 765 for the wife.

Laying low for more offers until after the home closing

cool story bro

In all seriousness, if you were unable to find a mortgage because of credit problems and had to rent.....maybe you would be saving money if home prices continue to fall?

not investment advice

Thank you for once again confirming that churning and opening many cards that credit scores don't get super killed and that a mortgage is still possible to do.

I would exercise extra caution if one needs a mortgage, either buying or re-financing, in the near term. Just recently, I knew that someone with 740 FICO couldn't get a rate while another with 775 got it.

I agree with you that you should exercise extra caution if you are looking for a mortgage in the near future - sure, they are reports of folks getting mortgages and churning heavily, but the downside of not getting approved for a mortgage (or getting a higher rate) is far greater than the upside of extra miles (at least for me).

That doesn't mean that I will not apply for any credit card, but perhaps limit myself to 4 or 5 every year in the 2 years leading up to when I'll need a mortgage.

I would have thought cancelling cards and having them reduce your credit lines would be more harmful to your credit rating than recent inquiries as it would increase your % utilization. Be prepared to explain any inquiries in the last 90-180 days based on my recent experiences refinancing.

I have 20 inquiries over the last 2 years... refinanced with Penfed 15 years at 4% (no cost) in March. Their rate on the 5/5 ARM became so attractive and OUR current situation is such that it made sense to refinance into this loan (again no cost refi - will have to cash out $50k) so we applied and again was approved. Its not so much the inquiries but the credit score and ratios (front end and back end) that determines qualification. Obviously if you get the cards and run up the balances, your score will go down and so will the amount qualify for. Having said that knowing that I was going o do the first refi,i did lay off applying for CCs.

cancelling lowers your score. decreasing limits will actually help as it lowers the amount of available borrowed money. Keeps the debt to income ratio lower

I just closed on my mortgage
 

The number of credit card applications (10) was listed as a negative factor, but my score was still > 775.

Thrilled to hear the success stories. This has been my biggest fear with opening up cards. My wife and I both have FICO scores at around 770, but I was worried that churning (I just started, only 4 cards each) could disqualify me.

I will exercise caution, but happy to hear that it is not a big issue! :D

Everything quoted here is completely false.

Cancelling cards may lower your score if it increases overall utilization. Decreasing limits may lower your score for the same reason.

Available credit is NOT debt and therefore is NOT included in one's DTI ratio.

I agree. Nothing in that post was remotely accurate. Creditboards or myfico should really be read by folks who do not understand credit scoring. Especially those trying to offer advice.

Im not a mortgage broker but id be willing to guess that income is just as important (if not more) than your credit score. Who cares what the score is if you cant make monthly payments.

That being said, churning cards actually raised my credit score as my combined credit limit is well over 100k now and debt nonexistent.

I also secured a line of credit for a start up business and received no mention of the 15+ inquiries that show on my report.

so if you make say 100k/yr and have numerous cc with a total credit line of 200k, this is a good thing? mortgage company will think low risk?

Firstly, jmw2323 - thanks for giving me hope that my credit score might still be intact after my year of mileage chasing through CC signups.

I'm not a professional, so I'm not here to answer your questions, but I do think it would be wise for everyone to understand how their own scores are calculated:
http://www.myfico.com/crediteducatio...yourscore.aspx

You might find a relevent answer in the last two bullet points of the "Amounts Owed" section.

Your losing maybe 20 to 25 points max in my experience from thos inqs. I dropped 8 at once and my Fico moved from 763 to 788. But then again, banks have their own extrapolated score systems too.

having too much available repective of income amount is not good either. I'm not sure where to red line starts but I would suspect having twice as much available to you than you make is borderline risk.

I am going through the mortgage process right now and have recently been approved. What I did was make sure all my credit cards had a zero balance for one full cycle, before starting the application process. Even with that, banks are being anal on the applications. I’m purchasing my 3rd home, and have never experienced as excruciating as this (I always pay everything on time and buy within my means).

I’m in a “LUL” period for about 3 months while I go through this process…once I close on the house, I’ll start up the credit card / coin churn process again.

Here’s two simple pieces of advice:

1 – Don’t give the banks any reason to reject your loan application…they probably will in this climate.

2 – Pay all credit cards balances in full and live within your means. I’d stay away from any house that requires a Jumbo Loan…you may have to live with if forever since nationally house prices are falling, and finding someone three years from now, who is willing to pay what you’re paying now, will be almost impossible.

Good Luck

I've gotten 20 something cards in past year and my credit score has gone up 25 points. The "hits" of 2 points each only lasted for a month or two while the available credit not used increased my score.

Of course just the number of inquiries alone can be a reason for more cc denials but I haven't hit that yet. (On every app-o-rama I keep thinking This is it). And I don't know what effect all the inquiries could have on any re-financing I may do in the future.

My FICO is in top 10%, my Vantage in top 5%, I own my home with 25 years payments on mortgage, so I may be different.

virtually impossible in many parts of the country

This doesn't make any sense? I would think with 20 new cards in 1 year you would drastically lower your average age unless it's heavily weighted with many years already, and those additional cards this year signficantly reduced your utilization. So what's your strategy on applying? Oh, I'm just now seeing the 25yr mortgage.

The top tier rate threshold seems to be around 750-760 depending on lender. So it makes sense 740 does not get the same rate tas 775. A 759 might not get the same rate as 761, so if you lie on that border, it makes sense. However it seems if you have 761 or 810, it doesnt make much difference to the lender.

As noted above there are many factors that affect your score, and applications are actually fairly low in terms of the hit you take on your score.

For the past 5 years I have been getting alerts from equifax (which uses real FICO) every time my score changes. From what I've observed the biggest hits have come from increasing my utilization on an individual card, this can knock the score anywhere from 20-40 points, particularly if more than one card goes up at the same time. Note, it doesn't matter whether I carry the balance, I get the hit just the same if I charge $5k on $10k card or do a 0% balance transfer. The score usually goes back up when I pay off the card, but not always by the same amount. Applications seem to have little effect though paradoxically I've seen scores rise when a new card is reported (lower utilization I guess). The other major hits come when you close an old account - this seems to unfairly penalize consumers when banks change the terms, i.e. new annual fees, etc. But this effect is also reduced as you get older and your other accounts age.

Over the past 3 years we've bought 1 car (.9%) and closed 2 home mortgages (the latest at 4.25%/30year fixed) so I have never felt it prudent to play the app-o-rama game. We generally apply for 1 new mileage-bonus card per person each year, and don't seem to have any problems.

However if your score is within 20 points of the cutoff - 760 and 720 seem to be key threshholds - I would not roll the dice for a few miles if you have a major mortgage in the works. the difference between .25% on the life of a loan will cost you far more in real cash than the value of your FF bonus miles, even if you refi later you'll pay thousands in costs. Better to wait - there is always another deal around the corner.

Now of course if you don't need a mortgage, your credit score is 780+, and you don't plan to jack your utilization with high balances (i.e. for a 0% offer) then by all means apply as you wish. But not too many people fall into that category.

The new mortgage caps will probably have a larger impact on some people than credit card applications:

http://online.wsj.com/article/SB1000...=ITP_pageone_1

Robyn

Well.. that isn't what you said in the the post I quoted. What you stated is completely false and I stand by my original statement.

I believe the riskier person is the person that just recently opened up 5 accounts - I'm not advocating that at all.

And from my own experience of having more available credit than income and obtaining a mortgage and multiple car loans, I'd say that DTI (actual monthly debt/income), down payment, and history play more of a factor than available credit.

Thanks for the info in your post.

What does Equifax charge for this service? Sounds very useful.

Assets and overall net worth come into the equation to level out the credit over income perspective, as well

You can use Myfico.com for monitoring. It is about $99/yr.

Somewhat OT - but when I clicked on a link from some points website - it said I could get free credit reports once a year from a website I can't remember. So I got these credit reports (which told me what I already knew - that we had X credit cards and they were all in ok status). But when I tried to get my and my husband's FICO scores - I got to places where I had to sign up for this - that or the other thing (although some were on a "free trial" basis). Is there any way to get a free FICO score - no strings attached? I'm basically more curious than in need of knowing it. Robyn

I haven't found one and would like to know too. :) Some (most?) of those sites are very misleading with the "credit report" that doesn't include FICO scores.

Do your homework before signing up for any service. Myfico.com gives you Equifax only. I wish I knew more about all this to give better advice. I did find it frustrating to sign up for a service for a free score only to have to pay for it later.

Some of those note I have read and its totally automated and many don't make any sense or logic.

The dread of having recent inquiries for responsible churners who are anticipating a new mortgage has always puzzled me. I am happy to explain, and actually want to explain that I am opening these recent credit cards solely to get the initial bonuses that come with the card and will most likely be canceling them in the near future. And as you can see from my history, I'm certainly not opening them to enable me to pay off a car or whatever that I can't afford. And I would be more than happy to close them (as long as I've already got the bonus from them of course ;)) if that would make them feel better, especially since I would most likely be canceling them in the near future anyway. So aside from the potential minor credit score hits, several recent inquiries for a responsible churner shouldn't be much of a problem in a mortgage process.