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Question By
JennEscalona

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Should I Stop Using Credit Card Before Applying for Construction Loan/Mortgage
I'm completely out of debt, and I currently use a rewards credit card for all expenses and then pay it off at the end of every month. That's generally $2500-$3500 (I bring home a little over $5k a month and I save or invest the rest.) I'm about to take out a construction loan that will roll over into a mortgage and I'm wondering if I should stop using my credit cards altogether just until I can get my loan approved and closed? Basically I just use my credit card for the travel rewards points so it wouldn't be a problem to discontinue using it for awhile.

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Make sure that a small balance reports on just one of your cards and that is all. Less then ten percent of the credit line. You can use what you want on the card, but make sure at the time the account is reported to the credit bureaus you are showing less than ten percent of your credit line. Note: a small balance does need to be reported on at least one card every month so you are not dinged by FICO for not showing any revolving activity.

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JennEscalona

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Thank you!

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