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Just Say "NO!"

Well, "No thank you." might be a little nicer.

Friday night I was at Pier One buying a small table and the clerk did her best to convince me to open a Pier One credit card so I could save 10% on my purchase. THIS DRIVES ME CRAZY! It took every ounce of my self control to not lean into her about how her "generous" offer threatens the unknowing consumer's credit score, not to mention it could even jeopardize a pending closing on a recent home purchase or refinance!  Here's how it goes...and this is REAL folks.

Buyer is in the process of buying a house. The purchase and sale agreement has been executed, the first and second deposit checks are escrowed and the financing has been approved. In other words, the closing is scheduled and the deal is just about complete. Moving day is right around the corner. Somewhere between the time the ink dries on the contract and the scheduled closing date, the buyer decides to purchase a new car (or appliances or furniture). The buyer has no idea that the bank will run another credit inquiry close to the closing date to confirm that the buyer can STILL afford the loan and hadn't assumed any NEW debt. Well I'm sure you can imagine what they find in this scenario. The newly acquired car payment changed the ratios and the buyer no longer qualified for the home loan. The deposit/down-payment is LOST, the buyer doesn't get the house and the new car is nowhere near big enough for their family to live in. This entire scenario could have been avoided had the buyer simply waited until AFTER the closing to buy the car.

Buying a small table at Pier One isn't going to throw off your affordability ratios but it's very true that frequently opening small accounts like store credit cards WILL have a negative effect on your credit score. Don't take my word for it. Click here for Forbes' lessons to improve your credit score. And while we're at it here's a list of 10 Things You Shouldn't do Before Buying a Home.

Having constant face-time with our very diverse group of preferred lenders has its advantages. It's like having our own lending education department right here in our office. We are always on the cutting edge of what's happening in the lending world and that allows us to educate our clients on the most current trends, programs and of course, rates. More importantly, it helps us to be proactive and protect our clients from potential complications during the loan process. We pride ourselves on continuously educating ourselves and building relationships with like-minded professionals. We strive to provide you with the proper tools and education in the beginning so there are no surprises.

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