Need Help: Have 3 Credit Questions

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makwa3
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Need Help: Have 3 Credit Questions

Postby makwa3 » Wed Nov 13, 2013 1:38 am

Here is the situation:

I travel quite a bit for work and play. I am also in the process of completing some house plans and plan on finding a lot to build on and going to a mortgage broker and banks to get quotes on finance in the middle to end of Q214.

I currently have the following ball park balances on these cards - in order of oldest to youngest: (credit/limit/%)

1st Financial Bank: ($8450/$17500/48%)
American Express Blue Sky: ($2700/5800/46%)
barclaycardUS: ($1750/$4800/36%)
American Express Premier Gold: (paid in full each month)
(wife-I'm only an Authorized user*) Nordstrom: ($0/$2000/0%)
(wife-I'm only an Authorized user*) American Express Gold Delta ($3500/$7800/44%)

Credit Score: 712/712/716

Inquiries: 3
- Dec. 2011 (comes off here next month)
- Aug. 2012 (personal guarantor for a car under a company of mine - car not on personal credit)
- Sept. 2013 (personal guarantor for a car under a company of mine - car not on personal credit)

I plan to pay off all credit cards 3 months before submitting paper work for my construction loan & mortgage.

I am trying to simplify how I pay my transactions and am looking to get a credit card for one of my businesses.

Questions:

1. If I apply for a credit card now, Nov-Dec, at least 6 months before doing the house finances, do mortgage lenders see that as a negative thing me getting a business credit card, even with all cards paid off?

2. Looking at the American Express Delta Reserve card, as I travel primarily with them and can spend a good amount on tickets during the year. I would like the extra MQMs and extra perks that come with the card according to how much I will spend on it each year. I know that I listed that one of my wife's cards is Delta Gold but I am only an authorized user and all the points we earn on that go towards her SkyMiles, I would like my business paid flights to go to my SkyMiles #.

Thanks for the help in advance.

*Though my wife's credit was pulled and not mine, these balances add up to my total credit limit on my credit reports.
Credit Cards:
Visa - barclaycardUS White, Nordstrom, 1st Financial Bank
AMEX - PR Gold Card, Delta Reserve Business, Blue Sky, Gold Delta


MemberSince99
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Postby MemberSince99 » Wed Nov 13, 2013 6:43 am

djrez4 here went for a mortgage and they didn't care about his inquiries much from what he reported. The scores he gave were lower than yours though I'm sure there is a pretty high income there. If you want every last point to get a better rate it's important but I don't think an inquiry is that likely to get you declined all things being equal.

I didn't see a question on #2 just a statement I must have missed that one.

makwa3
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#2 question

Postby makwa3 » Wed Nov 13, 2013 10:23 am

Yes it was late last night and forgot my question on #2. The question would be if AMEX would accept my application for the Delta Reserve where I sit right now on my other cards, less than 50% on each. Or do I need to pay them all down more or completely? Like I've stated, that's the plan before going in on the house but have some money tied up right now and don't want to quite yet but I would like to get the card ASAP. As a note that I didn't mention that AME will take in account on the application: I do have a great salary.
Credit Cards:
Visa - barclaycardUS White, Nordstrom, 1st Financial Bank
AMEX - PR Gold Card, Delta Reserve Business, Blue Sky, Gold Delta

MemberSince99
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Postby MemberSince99 » Wed Nov 13, 2013 10:27 am

For best odds I'd pay down the balances.

You will still have to let the new balances report, so if time is of the essense here then you might want to take your chances now as it's not a hard pull if you get declined (though that won't make your day).

Everything is a trade off.

And none of us can truly predict if they will approve, they might as is, but if you want the best chances pay down those balances have only one card showing a 1-5% balance and you should be in terrific shape from what I can see.

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djrez4
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Postby djrez4 » Wed Nov 13, 2013 11:42 am

I was at 701 EQ, 710 EX and 720 TU when we applied for the mortgage. My scores cost me about 1/8 of a point. 720s across the board would have kicked me up into the highest bracket. I think you can get there if you pay down your balances. A new inquiry can have a small effect on score, but not enough that you'd be under 720 once those balances are paid.

They were concerned with repayment ability - whether the monthly payments on my cards would eat up enough of my income to make it difficult to pay the mortgage. Because I generally don't let balances report, my monthly payments showed $0. They didn't care about my many cards. On the other hand, my wife had a small balance on one of her cards that reported a minimum monthly payment of $25 or so. The bank requested that she pay off the card and close it. Does it make sense that they don't care that I have available credit that could, theoretically, eat up my annual salary but they want my wife to close a card with a $10k limit? Not on Planet Logic. But, that's how the metric works. If you have a minimum payment reporting, it counts against your repayment ability. If you have $0 balances across the board, even if you have a stupid amount of credit available, it counts for nothing.

I had to complete a form explaining my inquiries, but they didn't really care one way or another whether I had them (I had 4 inquiries within 6 months and 16 within 12). The form listed each inquiry; I wrote things like "personal credit account" or "auto loan" in the space provided and never heard peep.

All that said, it sounds like you're going to finance construction of the home with a loan. That generally takes a construction loan which carries a higher interest rate and, I presume, different credit qualifications. Once the home is constructed, you refinance with a conventional mortgage at a lower rate. I'm not personally familiar with the process, so everything I've said, above, should be taken with a grain of salt. Your experience may be completely different. However, a good loan broker will be able to show you the best options for your financial and credit situation and help guide your choices.
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makwa3
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Postby makwa3 » Wed Nov 13, 2013 11:45 am

MemberSince99 - I've now read that several times that with AMEX, if you're declined it ends up being just a soft inquiry. How does that really work? If it's just a soft pull, that isn't bad. If I were to be declined now, couldn't I apply in a couple months after paying down?

Question #3 - if I pay off a majority of the amounts on the cards in the next three days, if I applied in the first week of December, would the credit agencies show the payoffs already? Or how long does it take for the credit card companies to report to the agencies?
Credit Cards:
Visa - barclaycardUS White, Nordstrom, 1st Financial Bank
AMEX - PR Gold Card, Delta Reserve Business, Blue Sky, Gold Delta

takeshi
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Postby takeshi » Wed Nov 13, 2013 12:55 pm

makwa3 wrote:MemberSince99 - I've now read that several times that with AMEX, if you're declined it ends up being just a soft inquiry. How does that really work?

Not sure what you mean. If approved it's a hard pull. If declined it's a soft pull.

makwa3 wrote:Question #3 - if I pay off a majority of the amounts on the cards in the next three days, if I applied in the first week of December, would the credit agencies show the payoffs already? Or how long does it take for the credit card companies to report to the agencies?

We have no idea when your cards report. It's typically when the statement cuts but it takes several days for the agencies to update.

stemc
 
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Postby stemc » Thu Nov 14, 2013 12:19 pm

Not worth it. My two cents would be, do not apply until you secure your mortgage.
Your credit score is not the only thing that matters.

Remember this, it all depends on the mortgage underwriter, it is what he or she thinks that matters. They project your spending patterns and are finally erring on the side of caution(which is the right thing to do). If you are getting a luxury credit card now, what's going to stop you from getting a luxury car a week after your loan is approved ?


I was in a similar situation my median credit score was 753 and I got denied with the first bank because of a recent credit application. I was applying for the lowest available mortgage rate. 1/8 th of a point is not a big deal , but you are not sure whether the effect will be 1/8th of a point or 1/2 a point.

I had to stay in a hotel for three weeks until I could close using another bank for the best available rate
.



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