Over the years I have seen mistake after mistake made by borrowers due to the information given to them by a mortgage loan officer. While there are many knowledgeable professionals in the market place today, many do not fully understand how certain accounts on a borrower's credit report impacts the credit score of the borrower.

In general your credit profile is a snapshot of who you are and how responsible you are. For example, too many inquiries are viewed by the credit agencies as a borrower "credit shopping". Additionally if your credit profile shows address variations or multiple jobs, you are viewed as an unstable borrower.

One of the most common mistakes made by mortgage professionals today is the dealing with revolving credit. Generally speaking most credit agencies do not want to see more than 30% of your total debt to be revolving debt. So lets say you open a credit card with a $10,000.00 credit line. This new credit card combined with the other revolving cards gives you a maximum revolving line of $20,000.00. Credit agencies do not like to see more than $6,000.00 charged between the two credit cards.

However, sadly you cannot manage your card debt and you take the new card and max it out going to Cancun for spring break. Deciding that you need to consolidate your debt, you seek a debt consolidation loan and contact your local lender.

When your local lender looks at your credit they see the debts needing to be paid off and structure a loan to fit your needs. The day of closing comes and you realize that the bank is going to pay off your debts, but they are closing the accounts being paid in full. You think to yourself "good" I will not be in this position again. This is bad decision because as soon as they close the account(s) your credit worth has just diminished.

In closing the majority of your credit score is directly related to your revolving credit. So as you lose the accounts you will lose your credit rating. My personal rule of is once you open a revolving account you should never close it. Additionally, I would recommend every consumer obtain a personal credit report annually and review the profile for errors. Most credit agencies will provide you one free of charge annually. While these little errors do not make a big impact on your credit score(s) they will add up and you might just be surprised.