Anti-Checklist: What Not to Do Until You Close Escrow

Take a list of things to avoid before you close on your new house.
By: Tara-Nicholle Nelson

Don't Close Any Accounts

It makes it look like you have less available credit. Pay accounts down to 30 percent, or pay them off if you insist, but DON'T close them!

Don't Make Any New Bills

New accounts create a FICO-reducing triple whammy of a new account/inquiry, an account with a short length of repayment history plus a high balance-to-credit limit ratio. (When you first open an auto account or installment account, you are already at your credit limit -- so it looks like you are maxed out.) The exception -- if you have no credit accounts at all, you should open one or two secured credit cards at your bank, then use them (up to 30 percent of the limit) and pay the bills on time every time.

Don't Buy a Car

See above. This also makes it harder for you to have a qualifying debt-to-income ratio, by increasing your debt without increasing your income. As a comedian once observed, "If you have a Land Rover and a landlord -- it's time to reverse your priorities."

Don't Pay Bills Late

You would not believe the number of people whose credit scores actually drop while they are house hunting because they make late payments. I've actually seen people who just barely got pre-approved have their FICO scores drop, find the house, make an offer, and then SURPRISE!! They no longer qualify for the mortgage because they have paid their bills late. 

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