STOP BEFORE YOU OPEN THAT STORE CHARGE CARD TO SAVE 15%

Tempted to take advantage of those post holiday sales?? Retailers bombard shoppers with at-the-register offers to "open a charge card and save 15%". 

It's an immediate money-saver, but for Americans in the market for a new home loan, taking advantage of the in-store savings could be a long-term loser.

This is because new credit card applications are damaging to credit scores.  According to myFICO.com, "new credit" accounts for 10 percent of a credit score; recent applications may signal weakness in a borrower's profile.

Meanwhile, conforming mortgage lenders make rate adjustments for low credit scoring applicants.  As an example, a home buyer with a 20 downpayment and a 715 credit score would face an interest rate adjustment of 0.125%. 

Below 700, the adjustments are even worse. What's worse is the fact that your mortgage loan is approved based upon your debt to income ratio. Opening a store charge card will open up a whole new line of debt to factor in.  The lenders may look at this new credit limit as if you have borrowed the whole limit and your approval may turn into a denial.  How many store credit cards do you have?  Chances are those offers to save 15% have resulted in a wallet full.

It's okay to take advantage of the in-store savings, but just be aware of how it may impact your credit score going forward.  If you're not applying for a new home loan in the next six months, chances are that you'll be alright. 

But, if you will need a new home loan, consider whether saving 15 percent on a $200 purchase is worth it if the long-term cost is paying an extra 0.125 percent on your new mortgage.