Karen J. Church, of RE/MAX Integrity in Eugene, Oregon presents Part 9: Dos and Don'ts during the Loan Process.

Karen Church, your "Go To" gal at RE/MAX Integrity at www.eugenehomesgal.com discusses the question of "Dos and Don'ts during the Loan Process".

When you fill out a credit application, a lender runs a credit report for the underwriter. Each lender and each loan program has different guidelines they must follow. You should not do anything what will have an adverse effect on your credit score while your loan is in process. We know it's tempting... if you're moving into a new home, you might be thinking about purchasing new appliances or furniture, but this is really not the right time to go shopping with your credit cards. You'll want to remain in a stable position until the loan closes and this gives the lender the opportunity to help you lock in the best interest rate that they can possibly get for you.

Here is a handy list of dos and don'ts that you should adhere to after you loan application has been submitted to the lender.

DON"T apply for new credit of any kind - If you receive invitations to apply for new lines of credit, don't respond. If you do, that company will pull your credit report and this will have an adverse effect on your credit score. Likewise, don't establish new lines of credit for furniture, appliances, computers, etc.

DON'T pay off collections or charge-offs - Once your loan application has been submitted, don't pay off collections unless the lender specifically asks you to in order to secure the loan and they recommend that you do everything possible to negotiate deletion in exchange for payment. Generally, paying off old collections causes a drop in the credit score. The lender is only looking at the last two years of activity.

DON'T close credit card accounts - If you close a credit card account, it can affect your ratio of debt to available credit which has a 30% impact on your credit score, and also your length of credit history which has a 15% impact on your credit score. If you really want to close an account, do it after you close your mortgage loan.

DON'T max out or over charge existing credit cards - Running up your credit cards is the fastest way to bring your score down, and it could drop up to 100 points overnight. Once you are engaged in the loan process, try to keep your credit card balances below 30% of the available credit limit.

DON'T consolidate debt to one or two cards - Once again, you don't want to change your ratio of debt to available credit. Likewise, you want to keep beneficial credit history on the books.

DON'T Raise red flags to the underwriter - Don't so-sign on another person's loan, or change your name and address. The less activity that occurs while your loan is in process, the better it is for you.

DO join a credit watch program - Your bank, credit union or Credit Card Company may be able to provide you with a free credit watch program that can alert you to any changes in your credit report. This can be a safeguard to help you intervene before the underwriter sees a problem.

DO stay current on existing accounts - Late payments on your existing mortgage, car payment, or anything else that can be reported to a CRA ca cost your dearly. One 30 day late payment can cost anywhere from 50-80 points on your credit score.

DO continue to use your credit as you normally would - Red flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patters, it could cause your score to go down. Fore example, if you've had a monthly service for Internet access billed to the same credit card the past three years, there's really no reason to drop is now. Again, make your changes after he loan funds.

DO call your loan consultant - If your receive notification from a collection agency or creditor that could potentially have an adverse effect on your credit score, call us so we can try to direct you to the right resources and prevent any derogatory reporting to the credit bureaus.

(Source: Based on The Top 10 Credit Dos and Don'ts During the Loan Process, provided by Credit Resource Corp. www.creditresourcecorp.com)

This information has been obtained through the Real Estate Lending Group. Be sure to contact me if you need further assistance.

Stay tuned for Part 10: Credit Remediation