Many people ask if they can keep using their credit cards when it comes to underwriting, which is the process of assessing a borrower’s creditworthiness and capacity to repay a loan. Yes, in a nutshell, but there are a few considerations.
First, it’s crucial to comprehend what “leveraging your credit” actually implies. Using your credit to obtain a loan or other form of funding is referred to by this phrase. For instance, if you have high credit, you might be able to get a mortgage or vehicle loan at a cheaper interest rate. To utilize credit wisely, you should refrain from taking on more debt than you can manage.
Another question that frequently arises is whether credit piggybacking is permissible. By adding an authorized user to your credit card account, you can assist someone else raise their credit score. Even while this practice is legal, it is less frequent since that credit bureaus are more diligent about finding and eliminating credit scores that have been falsely inflated.
One thing to bear in mind is that paying your mortgage using a credit card is often not an option. Because of the high processing costs associated with credit card payments, mortgage lenders typically do not accept them. Nevertheless, Plastiq payment is a workaround. using the help of a third-party business called Plastiq, you may pay all of your payments, including your mortgage, using a credit card. There is a cost, usually 2.5% of the total payment amount, though.
Responsible use of your credit cards is essential for underwriting. Your credit score can be raised and your chances of getting a loan authorized increased by making on-time payments and lowering your credit use. Additionally, you should avoid taking on excessive amounts of debt or opening a lot of new credit accounts, as these actions may raise a red signal with lenders.
Using credit cards during underwriting is normally permissible, but it’s crucial to utilize credit responsibly and be aware of any restrictions or penalties associated with it. You may increase your chances of getting a loan authorized and accomplish your financial objectives by utilizing credit responsibly.