How does the # of, and balance on credit cards affect your morgage application?
I thought that it was better to pay off and cancel all your credit cards before applying for a morgage. I asked a bank employee this question as I may seek a mortgage next year. She told me that it has changed somewhat. Now, it is to the buyers advantage to have many credit cards, with long history, and zero balances. I’d just like to position myself to the greatest advantage before seeking a mortgage.
Tags: affect, Balance, Cards, Credit, morgage
NEVER CLOSE CREDIT CARDS. THIS WILL lower your overall limits..and some credit card companies can PULL YOUR WHOLE HISTORY off the credit report, and that isnt ILLEGAL.
most lenders want 3-5 tradelines that have been OPEN for at least 2yrs for standard credit worthiness
5-7 tradelines that have been open for more than 4yrs is supreme credit worthiness
Avoid getting any new credit. That can affect your credit score up to 10 per cent.
Just pay on the credit cards, utilities, rent, etc that you do owe on time. You’ll be fine.
If you are worried, use a mortgage lender next year that does manual underwriting.
My husband has been in the mortgage industry for 21 years. Before we bought our last house, we paid off all credit cards and then we closed all cards we didn’t intend to use again. Lenders don’t like to see too much “available credit”. Think about it – you may have a zero balance today, but if you have a card with a $20,000 limit, you could easily be $20 grand in debt tomorrow.
Closing an account does not take away your good payment history. It still shows up on your credit report. The report shows when you opened the account, your credit limit, your highest balance, whether or not you were ever late, the current balance, and whether or not the account is open – among other things. It will still serve as a positive credit reference, even if you close the account.
A simple bank employee can’t accurately answer your mortgage questions. Consult a mortgage banker with a reputable mortgage company. Don’t use brokers, and don’t use a little fly-by-night mortgage company that most likely won’t be in business tomorrow. Try a well-known mortgage company like Wells Fargo Home Mortgage. They’ve been around for over 100 years. I don’t think they’re going anyplace, and their employees are very knowlegable.