Is Your Credit Active Enough?

November 5th, 2010

credit score

Is your credit active enough? I have a client who did not have active enough credit, and got a loan declined. Fortunately there were enough other lenders that saw the situation differently, but the topic merits discussion.

Here are the important details:

The client currently only uses one credit card.

The client has a dozen other items of credit on the credit report, but they are all older. There are other credit cards that have not been used in years. There are prior mortgages and car loans, but they are 5 and 10 years old.

I have a very conservative client, who has a proven track records with credit in the past, but only one piece of credit that is currently active. So what?!

What a bank wants to see

The bank that was underwriting the loan at first said they were declining the loan because they require ‘3’ pieces of credit to be currently active. Keep in mind this loan had 20% down, and the client had great job stability and cash reserves. This was not a marginal home buyer.

The bank explained further that while his credit score was high, they felt it was mostly based on the one active credit card, and would feel more comfortable if it was based on more items of active credit.

My reply

I mentioned to the underwriter that I could tell my client to go buy a t-shirt on a 2nd credit card, and a few dinner on 3rd credit card, and then he’d have 3 currently active credit cards! And I wondered, aloud, if this underwriter understood the folly of her requirement, at least in my client’s situation. She was not amused, and had no reply.


I could see their point if this was a borderline loan. But this loan was clean, perfect in fact, and logic should have prevailed. There are plenty of lenders that will make this loan, but we have lost time that would have been better spent elsewhere.

Lesson learned. Keep using your credit!

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Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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