credit score dropped prior to closing

13 Replies

I was pre approved for house and bank just accepted my offer last week, I received notification today that credit score dropped 28 points ONLY thing changed was alert saying "credit usage significantly increased 45%" it takes me to 608 score which is below 620 needed with lender for FHA. Spoke to loan officer and said yes it could affect me closing on home. My inspection is tomorrow so I have time I paid off card today to $0 balance. Do you think I will be OK come closing?

If you paid today it would take 30 days to reflect your score. If you are working with a realtor ask the realtor to do a rapid re-score.

Joe Gore

You can also ask your credit card company to report off-cycle.  Tell them why; they're mostly pretty accommodating.

Yikes. You should probably be OK if you can show the that the credit line has been paid off. 

Now, do you know what caused that spike? Meaning,was  it really was an accurate reporting of your credit? For instance, you went out and charged another $1000 and your credit line is only $2500, or something like that... If what they are saying doesn't match up with any spending you've done recently then check all of your cards (including any inactive ones) right away for fraudulent activity.

the spending was by me last utilization was 4% now at 45% think it dropped so much because I was already on the edge with 638 score and don't have long credit history, hoping that it will go up in 30 days or a rapid rescore will make it raise after its paid. Just freaking out right now!!

Don't freak too much.  If that is all it is, you should be fine.  There is such a thing as "utilization bucketing" which can make it take a bit to recover.  I suggest going to creditboards dot com.

If you do go to creditboards dot com don't do everything they suggest you will get your file locked.

Joe Gore

Ask the loan officer what they info need to make it OK. You may even be able to get on the phone with both the lender and the credit card company and get it worked out. I don't know how those "rapid rescores" work but that sounds like a good thing to pursue as well. 

Stay calm! 

but put the credit card in your sock drawer til after closing ;-)

Way the rapid re-score work the realtor will send over to each bureau that they have someone who is buying a home and the buyer has paid everything, but it will not reflect the credit in time, and the bureaus will freeze the negatives, and the bureaus will re-score your credit, and this fix is only good for 30 days, and rapid re-score is only for mortgage loans.

Joe Gore

Originally posted by @Joe Gore:

If you do go to creditboards dot com don't do everything they suggest you will get your file locked.

Joe Gore

 Pure and unadultated BS.  

Ask for a limit increase with credit card company, tant will lower your ratio...then try for rapid rescore. Only utilize 30-50% of limit, always! If u have a big purchase, usually better to get a loan or turn credit debt to a loan. Sometimes the credit card company will do that for you.

If he can pay off the balance, he doesn't necessarily need a CLI.  And depending on the company, that could very well result in a hard inquiry.  Chase, for example, is always a hard pull.  Then his mortgage could get denied for credit-seeking behavior.  So no, I think it is a really bad idea to ask for a CLI right now.

Which credit card companies will do a hard pull for a CLI is one of the things that can be learned on creditboards, by anyone who ignores Joe Gore's absurd statement, which is based on his antipathy for that website, not based in reality.

I was contacted by another lendor saying they do as low as 580 Credit score if I have good income and low credit debt ration which i have both. I believve I will go that route, since current LO said my score will be pulled again...

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here