Apply for CC now or wait before buying a home

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chrstgtr
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Joined: Thu Mar 07, 2019 1:34 am

Apply for CC now or wait before buying a home

Post by chrstgtr »

Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
Flyer24
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Re: Apply for CC now or wait before buying a home

Post by Flyer24 »

I would wait. A new credit card can lower your credit score due
to hard credit pull and new account.
Lee_WSP
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Re: Apply for CC now or wait before buying a home

Post by Lee_WSP »

Is there any pressing need to open it now? Because if not, only bad or neutral outcomes will come out of opening a new line of credit.
Monsterflockster
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Re: Apply for CC now or wait before buying a home

Post by Monsterflockster »

chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Topic Author
chrstgtr
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Re: Apply for CC now or wait before buying a home

Post by chrstgtr »

Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Don't have the cash. We are henry's. I want to get the credit card to take advantage of a good sign up bonus.
VoiceOfReason
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Re: Apply for CC now or wait before buying a home

Post by VoiceOfReason »

Like someone said before, only neutral or negative outcomes from getting a credit card right before applying for a mortgage.

This will likely be the largest financial transaction you will have made in your life to date, why in the world would you do anything to complicate this or potentially negatively impact it? For some airline miles?? I don't think that meets the bar.
bob60014
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Re: Apply for CC now or wait before buying a home

Post by bob60014 »

Unless there are other issues it probably wont matter, especially as the home purchase is possibly 5 months away. A very recent example, my credit score is in the 820 range too and I was approved for a CC, $25k, no interest for a home improvement project. There was only one other pull on my Equifax and T.U history and my credit score dropped a whopping 2 points due to the card. Ymmv.
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RickBoglehead
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Re: Apply for CC now or wait before buying a home

Post by RickBoglehead »

Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Because they can get an historically low interest rate and divert income to retirement accounts?

Because credit cards have benefits like cashback and other perks?
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
Paradise
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Re: Apply for CC now or wait before buying a home

Post by Paradise »

I’m pretty sure it will have no impact.

The only time you shouldn’t is when you’re in the middle of buying a house with a mortgage because each credit application during that process requires a written statement by you to the underwriter on what it is... major hassle.

My banker told me a story of a mortgage falling through because a couple went furniture shopping and put it all on a new credit card.
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260chrisb
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Re: Apply for CC now or wait before buying a home

Post by 260chrisb »

chrstgtr wrote: Thu May 13, 2021 11:26 pm
Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Don't have the cash. We are henry's. I want to get the credit card to take advantage of a good sign up bonus.
First, what are henry's? Second, and let me get this straight; you have an income of 600K and you're worried about how a CC will impact a credit score of greater than 800 for a mortgage rate, right? Come on, at that level and income it's irrelevant. Third, I'm all about something for free but how much could a sign on bonus for said CC be? If this were me, I couldn't possibly care less what my credit score is nor would I have a single incentive to do anything with any CC company short of using their card for free each month. I would also be doing about 50% down payment for the house but you didn't give enough details to best understand your thoughts. Seems to me at 600K a year a guy could easily do about whatever he wants and not worry about a stupid credit score or what a CC company offers.
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gr7070
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Re: Apply for CC now or wait before buying a home

Post by gr7070 »

If you're older and thus have more payment history, more accounts, and older accounts you'll be impacted far less by a hard pull.

If you're young with less of that I would not.
Monsterflockster
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Re: Apply for CC now or wait before buying a home

Post by Monsterflockster »

RickBoglehead wrote: Fri May 14, 2021 6:24 am
Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Because they can get an historically low interest rate and divert income to retirement accounts?

Because credit cards have benefits like cashback and other perks?
Probably just me but If I’m making 600k a year I’m not concerned or spending the time chasing credit card points beyond the ones I already have.

I mean 600k a year is a lot money. A home value less than one year salary should be paid off IMO. Why have the liability?

But that’s me.
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RickBoglehead
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Re: Apply for CC now or wait before buying a home

Post by RickBoglehead »

Monsterflockster wrote: Fri May 14, 2021 9:14 am
RickBoglehead wrote: Fri May 14, 2021 6:24 am
Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Because they can get an historically low interest rate and divert income to retirement accounts?

Because credit cards have benefits like cashback and other perks?
Probably just me but If I’m making 600k a year I’m not concerned or spending the time chasing credit card points beyond the ones I already have.

I mean 600k a year is a lot money. A home value less than one year salary should be paid off IMO. Why have the liability?

But that’s me.
As you know, one year's salary is not net of all taxes and expenses, but I get your point. You don't like the debt. Me, I'd finance at historically low rates and make a bunch more in the market.

As to chasing credit card points, I wouldn't chase, and at $600k income I wouldn't be worried about my credit score. However, I can't imagine ever not taking cashback or other incentives. So, with that income, I'd probably pay for a premiere card that had benefits I would value, and justify the fee based on the perks it gave me.

I will let you know when I have that problem - the $600k in annual income. :shock:
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
hachiko
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Re: Apply for CC now or wait before buying a home

Post by hachiko »

Monsterflockster wrote: Fri May 14, 2021 9:14 am
RickBoglehead wrote: Fri May 14, 2021 6:24 am
Monsterflockster wrote: Thu May 13, 2021 11:18 pm
chrstgtr wrote: Thu May 13, 2021 10:33 pm Hello, I am considering buying a home in the next 5 months and am wondering whether I should wait to open a new CC. I have read that a higher credit score doesn't improve mortgage rates once your credit score is over 750. My Transunion credit score is 812 per my Discover credit card bill. Credit Karma estimates that my Transunion score is 821 and that my Equifax score is 817. Should I wait? If it is relevant, the mortgage will probably be 20% down, a total mortgage value of 400K, taken out between two people (their credit score is around 800) and we will have a household income of about 600K.
At 600k income why would you not just pay cash for your house and bypass a mortgage all together? Better yet what would you need another credit card for?
Because they can get an historically low interest rate and divert income to retirement accounts?

Because credit cards have benefits like cashback and other perks?
Probably just me but If I’m making 600k a year I’m not concerned or spending the time chasing credit card points beyond the ones I already have.

I mean 600k a year is a lot money. A home value less than one year salary should be paid off IMO. Why have the liability?

But that’s me.
Some people enjoy the game.

That said, sign-up-bonuses basically always come back. And since most banks now-a-days are limiting their bonuses to first time cardholders or placing other similar restrictions, I'd just wait. It's simply not worth the hassle and/or risk. I agree that it likely won't make a difference. But I just can't see the benefit. Would you mind sharing what the card is? I haven't seen a credit card bonus out there right now that I just have to jump on, so I'd be interested in what offer you're getting. Even if it's a targeted offer, it's usually only worth $100-$200 more than the regular offers, so I wouldn't jump on that 5 months before obtaining a mortgage.

ETA: I also do not make 600k :)
Topic Author
chrstgtr
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Re: Apply for CC now or wait before buying a home

Post by chrstgtr »

Thanks everyone for the posts. Seems like there are at least some people who think it might have an impact so I will play it safe.

To answer some questions:

Henry stands for High Earner Not Rich Yet.

I can't put down a larger down payment because I haven't been saving to do so. I recently learned I will be moving cities to where I permanently plan to live, so I haven't started saving until just now.

Even if I did have larger savings for a bigger down payment, I would still want a mortgage so I could take advantage of low interest rates. If I could buy all in cash and do a re-fi cash out that would be great but I have no where near that amount of money even if we liquidated all our assets and paid the heavy taxes, which we don't want to do.

While our incomes are high now, they will decrease in the next year or two to half of what they are now.

We also haven't been earning at this high level for long. We are recent grads and had high student debt.
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