Q. I am under contract to buy a house, should I be careful how I spend money?

A. Yes. The mortgage industry is a bit out of whack right now and it is imperative to dot your i’s and cross your t’s.

I have “10 credit Do’s and Don’ts During the Loan Process” and will discuss five today and five next Monday.

CREDIT SCORE is the golden egg for getting a loan right now.

The underwriting lender will pull a credit report at closing, and if your credit scores have dropped, you may no longer qualify for the rate that was underwritten and the final approval may come back with a higher rate. All lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached, such as the loan to value and the debt to income ratio. This is something borrowers do not understand and they think the loan officer is baiting and switching. They are not. If an issue comes up and the underwriting lender decides you do not qualify for a certain loan, the only thing a loan officer can do is shop for lenders and see if any are willing to give the rate and program they thought you qualified for. Do not expect a loan officer to stand by their initial quote if when they pull credit, your scores have dropped.

1. DON’T APPLY FOR NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations in the mail.

2. DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process without first discussing it with your loan officer.

3. DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history.

4. DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your score down. Try to keep your credit card balances below 30% of available limit at all times during the loan process.

5. DON’T CONSOLIDATE YOUR DEBT ONTO one OR two CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you.

Any changes you want to make regarding your credit cards, wait until after closing. It is the safest way to insure the loan you are pre-approved for is the same when it is time to close the deal.

Brenda Kellen has been selling for over 10 years with Omni Real Estate and helps buyers and sellers in both Grand and Summit County. If you have questions/comments or need assistance, please e-mail brenda@tombrenda.com or call 970.485.1115.