Use a cash advance, instead of credit cards to support a future mortgage application. These short-term loans do not check your credit nor do they report you loan as debt on your credit history. Both are point savings to your score which whereas new credit cards would eat away at your score. If you are trying to buy a home, then you will want to protect your credit rating by avoiding many different activities.
Use a cash advance lender to help emergency costs, but pay it back in full quickly.
- Mortgage lenders want to see that you are secure at your job. If your information shows multiple past jobs within the last two years, some lenders will not look at that positively. They do want proof that you have been employed for the last two years, but many are focusing on the security of one job.
- If you owe child support or alimony, a mortgage company will view this as debt. This information must be reported on your application. Lenders do verify your marital status and child support or alimony status with the courts.
- Don’t think if you apply for a new credit card after you sent in your application for a home mortgage that it will go unnoticed. Lenders are notified of any changes which can slow down the application process. You also risk being rejected altogether.
- Closing a credit card in the same manner as above will also put your credit in jeopardy. Credit scores go down when credit cards are closed as they affect the algorithms in which the score is calculated. Closing a card will lower the amount of credit available while still figuring in the remaining debt. It will produce a higher credit utilization ratio.
- Don’t try to hide the fact that you are borrowing money for a down payment. Even though the money is not owed to a business which reports to the credit bureau, it is still debt which can get your application denied.
- If you are looking to buy a condo, rather than a home, the mortgage company will be looking at the finances for all the tenants of the building. The FHA will not approve a loan when more than 15% of the tenants are 60 days or more behind on the association dues.
- The size of your loan matters. Most people think about large loans being difficult to obtain. It is also tough to get a loan for less than $50,000 approved. A lender will pay money to process your loan, so the loan will need to be profitable for them.
- Don’t pay off old debt which is in collections and not active. This debt may not even show up on your credit score, but if you pay it off during the loan process (good intentions or not) the debt will be reported and can have a negative effect on your loan application. If you really want to pay what you owe, wait until after the loan has been approved and processed.
- Pay attention to more than just the score on your credit reports. Look through all three of the major credit bureaus’ reports to find any errors or negative reports which may prevent your application from going through. Correct what you can before applying for your mortgage. Try to do this at least six months ahead of time to allow all changes to take effect.
- If you are rejected for a loan, you will want to sit down with the lender to find out the reasons why and ask for strategies to improve your credit situation for another attempt later.
Any type of funding during this process can hurt your application status. If you do need help with a small amount, a cash advance is available to you with no credit bureau check. The loan is paid off short-term, usually about 2 weeks later. Be honest to yourself as to whether or not you will actually be able to pay the loan off. Leaving a short-term loan out for longer than the original due date will negatively affect your finances. Your future home depends on your ability to manage your money well. Good luck!
