Secret #2 for a Successful Mortgage Application: Avoid Applying for New Credit

Some lenders see a rash of recent credit inquires as a major red flag and a valid reason to decline your mortgage application.

Have you applied for a car loan and some credit cards recently? If so, you might want to wait a bit before applying for a mortgage for a new home. The reason being is that when a mortgage lender pulls your credit report, they are not just looking at your credit score, but also the number of credit inquiries that other lenders have made. If a lender thinks you have made too many recent applications for credit, chances are high the loan officer will decline your home loan application.

The Reasons to Lenders Look at Credit Inquires

Many people are surprised to discover how much weight lenders give to recent credit inquires. The reasons these “hard pulls” are considered important include the following:

  • If you are applying for credit cards, mortgage lenders question whether you have sufficient income to meet your expenses.
  • Even if you have enough money to pay your monthly bills now, taking on more credit means that you risk increasing your debt burden to a troublesome level in the future.

To find out whether recent credit inquiries are standing in the way of having your mortgage application approved, review your credit report with a home loan expert.