You Opened or Closed a Credit Card at the Wrong Time
Lenders are required to either monitor your credit for new inquiries or pull a new credit report the day before closing, according to Thomas. “Either way, we will know if you opened new credit and if there is a new inquiry, the home loan must be re-underwritten with the new liability and the new payment,” Thomas said.
“We must also obtain a new credit report with the liability. A new liability could lower your credit score and make you no longer qualify, or it could increase your debt-to-income ratio, also making you no longer qualified.”
Closing credit cards can also cause problems. “When you apply for a home loan, you want your credit report to be as healthy as possible,” said Ray Rodriguez, regional mortgages sales manager at TD Bank in the greater New York City area.
“You may think closing a card will help your finances, but in reality, this will reduce your overall available credit, which could negatively impact your credit score. When applying for a mortgage loan, it’s important to demonstrate a history of responsible credit and the ability to manage multiple accounts, so by keeping one or more cards open but refraining from using them, you will not affect your score.”
