Getting Credit Cards & Getting a Mortgage… It Is Possible

2011 was an amazing year for me. I rediscovered the sign-up bonus game with my fiancee and together we earned over 800,000 miles/points on bonuses alone. We also finalized plans for our wedding in Hawaii that is about 45 days away. But the most amazing part of 2011 came on November 29 when Joann and I closed on our first home! That’s right, as some may know and others may not, we are now part of the fraternity of “good debt” and are proud owners of a shiny new 30 year mortgage house! I know there is a lot of talk about messing with your credit before you are applying for something big like a car loan or mortgage so I want to share our story so people have yet another data point in this crazy game.

Let me start out by listing all the details.

I have very good credit. The last time I bought an official FICO score, it was 786. Joann has what would be considered OK to Good credit. We never got her official FICO score but services like Credit Karma always said she was around 700.

Here is the list of credit cards that I applied for in 2011, before we applied for a mortgage:

  1. Chase British Airways Visa Signature
  2. American Express Platinum
  3. Citi Select American Express
  4. Citi Platinum Select Visa Signature
  5. American Express Starwood Preferred Guest
  6. Chase Sapphire Preferred
  7. Chase United Mileage Plus

And here is the list of the credit cards that Joann applied for in 2011, before the mortgage:

  1. Chase British Airways Visa Signature
  2. American Express Premier Rewards Gold Charge
  3. Chase Sapphire Preferred

We were approved (either instantly or eventually after a phone call) for every single one of those cards and received all the bonus points/miles. Most of the hard inquiries (Chase & AmEx) were through Experian, as they are the most popular reporting agency used in NJ apparently.

Fast forward to November when our offer was accepted and we were under contract. We filled out a ton of paperwork and had a mortgage broker search for the best rate for us. The mortgage broker company hard pulled our credit  on all 3 agencies to make sure we would qualify for the best rate available. They sent us the paperwork with our official credit scores and it was no surprise that of the three, Experian was the lowest for both of us.

Mine was a 762 and Joann’s was a 692. Both were lower than they were before we started this credit card game, but I was surprised to notice they did not drop by “a lot”. The process was actually much easier than I thought; our broker was very good and we locked in a very competitive rate for our 30 year fixed mortgage. I’m sure we could have done better by waiting and checking back on rates daily, but we were comfortable with that rate.

The one caveat I noticed with all the new lines of credit and completing the mortgage underwriting was the lender requested a letter explaining all the recent credit activity. At first, I was scared because I thought this little game just screwed us over, but after talking with the mortgage broker, the letter could simply be an explanation that anyone could write. Here is the exact verbiage of said letter:

To Whom It May Concern,

This letter is to explain why I have six credit inquiries in the past year. This is because I was attempting to open new credit cards in order to continue building a strong credit portfolio. I was approved for all of the credit applications with a total credit line of over $35,000 and the balances are paid in full each month.

Sincerely,

infamousdx

Joann’s letter was similar but with her numbers substituted. And that was it! We had our mortgage shortly after without any hassle at all.

The point of our story is to distribute as much true information as possible. This is exactly what happened to us in 2011. I am not suggesting nor advising you to do one thing or another. Do what you will with this info, but make sure you take it all in. If I were to do this all over again, I’d probably lean on the conservative side of things and leave my credit untouched for at least 1 year prior to applying for a mortgage. But just because you are playing the credit card churning game, it doesn’t mean you can’t get a competitive rate on a mortgage (or any loan) for which you apply. Just make sure you are smart about it and protect your credit! As the Frugal Travel Guy says, your credit is your most important asset. Ain’t that the truth…

So good luck in 2012 whether you are applying for credit cards or loans! May it be lucrative for us and not the banks!

P.S. After we completely closed on the house, of course I went back like a junkie and applied for more cards with bonuses. 😉 The results of the latest app-o-rama can be seen here. Not bad!

4 Comments Getting Credit Cards & Getting a Mortgage… It Is Possible

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