Some people think it is smart to get an installment loan to payoff credit card balances and then close those accounts. It is okay to get a consolidation loan, but not a good idea to close those credit cards. The reason is part of your FICO score is based on credit utilization rate. Closing the credit cards could actually make your credit score go down instead of up.
The other problem is sometimes it takes a while for that installment loan to show up on your credit report. So make sure to do that at least 6 months before applying for a mortgage loan. When getting a mortgage loan, it is a good idea to make sure all debt is listed on your application. Other wise you could get turned down in the middle of the process or just before closing.
Once you make application for the mortgage, don’t incur more debt as this could make you not qualify for the mortgage.
For more information you can contact Rhonda at:
DEPENDABLE MORTGAGE CO.
License # 100008357 NMLS # 381084
145 Grand Ave., Suite B
Grand Junction, CO 81501
(970) 257-1502 or 250-8613
Web site: Dependable Mortgage Co. (apply online 24/7)
Regulated by the Division of Real Estate
An Equal Housing Lender