Is Your Credit on Santa's Naughty or Nice List?

If you're planning on applying for home financing, be sure to stay on Santa's nice list! Check out our top credit do's and don'ts during the loan process.

Credit Naughty List

• Don't apply for new credit. You can lose points from your credit score for every credit pull. 

• Don't pay off collections or "charge-offs." First, make sure that the debt is actually yours. Then, if you want to pay it off, do so through escrow. Also, remember to request a "letter of deletion" from the creditor. 

• Don't close credit card accounts. While closing may boost your FICO score initially, closing credit will impact other factors in the score, like credit history, and will eventually drop it.

• Don't max out or over-charge credit card accounts. Try to keep your credit balances under 30% of their limit during your loan application process. And if you pay down balances, do it across the board. 

• Don't consolidate debt. Consolidating your debt into one or two credit cards could make it seem like you "maxed out" on those cards and lower your FICO score. 

• Don't do anything that may raise a "red flag" on the scoring system. Potential red flags include adding new accounts, co-signing a loan, or even changing your name or address with the bureaus. 

Credit Nice List

• Do sign up for credit monitoring. Check your credit reports regularly (it won't impact your score). If something unexpected appears, address it promptly. 

• Do stay current on existing accounts. Even one 30-day late notice can deal a heavy blow to your mortgage application 

• Do continue to use your credit as usual. Changing your charging pattern would raise a red flag and cause your score to go down. 

• Do consult your loan professional. A knowledgeable, experienced loan originator can help you navigate the application process and assist you in choosing a loan that best serves your needs.