An Active Rain associate, Philip Turner, recently posted a member's only blog on not making any changes during the loan process. This is in relation to purchasing anything new with credit. I agree wholeheartedly and would like to illustrate this with a client that I'm currently working with.
Bill (not his real name) was referred to me by an agent that I'm working with. He was in the process of purchasing a new property and selling one of his rentals. His credit score was around 650. He had no derogatory marks on his credit but did have high balances on both of his credit cards. Our intention was to pay his debt down once he sold his rental.
I ran a scenario through a "what if" simulator that my credit reporting company has and found that if we left around $100 on both cards his scores would raise by at least 50 points. This would put him in a great loan at 95% CLTV.
Several weeks later I reran his credit as we were faced with a decision and I wanted to make sure taht we were ok. His scores had decreased to about 642. Ouch! Other than my credit pull, the only other action was an additional $1000 placed on his credit cards.
Fast forward to last Friday. He has sold his rental, paid his cards down to around $300 each and we have successfully updated his credit report with all three bureaus. He now has a 713, 705 and 698. We will be able to place him into a great loan.
I bring this up to show how much a credit score can flucuate in a very short time period.
Larry Morris is a Certified Mortgage Planning Specialist and Certified Mortgage Coach with Golf Savings Bank in Beaverton, Oregon. He specializes in USDA Guaranteed Rural Home Loans, FHA Purchase and Refinance, FHA 203k Rehab loans, FannieMae HomePath loans and conforming purchase and refinances in the states of Oregon, Washington, Idaho and California.
He can be reached at 503-421-0096, or larry@PDX-Mortgage.com.
