These days, it isn’t as if pipelines are full. Every potential borrower is precious to lenders and loan originators, who in turn want to “put their best foot forward” when it comes to the initial contact and commencing collecting the borrower’s information and processing the loan. Experienced originators will say that instructing the client how to “opt-out” of having credit activity be seen by others is the first step, but pulling the borrower’s credit to check on the numerical score is one of the first things mortgage lenders do. But what happens then?
Of course, the better the three-digit Fair Isaac number, the higher the chances of not only the loan being approved but also getting favorable terms. A trained LO will work with their valued client in improving their credit profile, starting by advising the client to be diligent about making on-time payments. A client’s on-time payment history is very important, and makes up about 35% of a person’s overall credit rating.
Easily overlooked is the timing of making those payments. Borrowers can find out when creditors report balances to the credit bureaus. A client who waits until the due date to pay off the balance may push recording that payment into the next month. This balance could negatively impact a borrower’s credit utilization or the total amount of credit someone is using divided by the total amount extended.