Common Credit Mistakes
Bettye Banks, senior vice president of education for Consumer Credit Counseling Service of Greater Dallas, says the common credit mistakes people make are:
Obtaining too much credit too quickly
Maxing out accounts (owing more than 50 percent of available credit, including composite of all accounts)
Missing payments
Applying for too many accounts
Making only minimum-required payments
To get your credit profile and rating in their best shape before applying for a loan, consider the following recommendations by Craig Watts of Fair Isaac:
Several (three to six) months before you think you'll apply for the loan, check your credit reports from all three credit reporting agencies (CRA) and work with each CRA to clean up any errors.
Check your FICO score from each credit reporting agency at
If you owe large amounts on credit cards, do your best to pay those down — the lower the better.
Avoid opening any other new credit accounts during this period, which means until your loan application has successfully passed through escrow. That's because applying for credit and opening a new account will often cause your FICO score to drop at least slightly, since they indicate you have become a riskier borrower statistically. And lenders often check an applicant's FICO score more than once during the escrow process, so it's not a good time for your score to unexpectedly take a dip.
