Live and learn, as they say — and as I experienced the hard way, in some ways, with my recent attempt to refinance my house.
As far as that goes, I am down but not out. Financial circumstances being fluid, mine are running all over the place right now, so it will be a month or two, probably, before I can get a good enough run to take another jump at it.
The devil is in the details — and there needs to be some exorcizing and that takes awhile.
In the meantime, some local mortgage lenders and brokers who followed my saga with Wells Fargo, as logged here, have been emailing me questions and advice.
Here are some tips on how not to derail the loan process — or how to keep a good credit score in general — from Scott Senner, a mortgage consultant with First Commercial Bank in Edmond. The information came from Loantoolbox.com. Some of it I knew, some of it I should have known, and some of it was a big surprise to me.
Take this: “Don't allow any accounts to run past due — even one day!” That should be no surprise to anyone.
But this was a surprise. It's infuriating, in fact. It might surprise you: “Most cards offer a grace period, however, what they don't tell you is that once the due date passes, that account will show a past due amount on your credit report. Past due balances can ... drop scores by 50-plus points.”
Common civility and the traditions of a family newspaper will not allow me to express my reaction to learning that.
Here are a few more:
• “Don't apply for new credit of any kind.”
Whenever your credit is pulled by a would-be lender or creditor, your credit score loses points. Not news to me.
• “Don't pay off collections or charge offs during the loan process.”
Ugh. “Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of the last activity becoming recent.”
That was news to me. “If you want to pay off old accounts, do it through escrow — at closing.”
• “Don't max out or over charge on your credit card accounts.”
No surprise there, but this was an eye-opener: “Don't charge on credit cards at all if possible.” Are you kidding me? Sigh.
And I knew this in general but had never seen a percentage spelled out: “Keep your credit card balances below 30 percent of their available limit at ALL times during the loan process.
And if you decide to pay down balances, do it across the board. Meaning, pay balances to bring your balance-to-limit ratio to the same level on each card (i.e. all to 30 percent of the limit, or all to 40 percent, etc.).”
• “Don't consolidate your debt onto one or two credit cards.”
Makes sense. “It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you ... If you want to save money on credit card interest rates, wait until after closing.”
Finally, here are two more ways to keep from stirring up bad credit karma: Don't close accounts, or it will look like your debt-to-income ratio has gone up.
And don't dispute anything on your credit report once the loan process is under way, because anything in dispute probably will stop a loan underwriter — and the loan process — dead cold.
There you go. Some news to use to avoid the refi blues.