Credit Question

[93SVT]

Ok so looking to go get qualified for a home loan in the coming weeks and I've been told that if I have credit cards with 0 balances its not going to look good on my credit and that I'd be better off with $50 on them, I have 3 credit cards and they are all at zero, is there in truth to this?

[punch]

Hrmm, I have no idea if it will make any difference.

[Fernanernie]

I don't think that its' balance, more of activity, that they're looking for.

[Matt87GTA]

Like Fern said, from what I understand, it is if the trade lines have been used recently or not and then they will look at how the balances and payments affect your ability to repay the loan. If you have a trade line that you haven't touched in many years, it doesn't do anything for your credit one way or another. I don't know how they look at trade lines that have been recently paid off though... My guess would be that if your score is high enough and you don't have any lates, it can't be a negative.

They are going to run through all of your debts and payments and come up with a debt to equity ratio and how much in monthly payments you are obligated to. Those are what will tell the bank if you can pay for the loan you are requesting and how likely it will be that you will not be able to repay the loan and then how many debters are going to be waiting in line to get money/equity out of you if you start defaulting on things.

[xenodragon]

Having a $0 balance wont hurt you, because they will add up your total available credit. However, they like to see activity on the cards. Activity will help you not hurt you. If you are paying off the cards on a monthly basis then you are fine, and they will see that.

I think (not sure) that if your AVAILABLE credit is over the loan amount or close to it, you are likely to get the loan.

My wife and I just bought a house a year and a half ago, and we both did not have much credit...our credit wasnt bad, but we just didnt have any. They still approved us even with everything I owed on my cars. I think its pretty easy to get home loan, because they have the house to fall back on if you default.

Its really hard (as i have found out) to get a home improvement loan. Because they have nothing to take from me if I do not pay, they wanted me to put my cars up for collateral. I said fuck you and went to my wifes dad instead...gotta love have stupidly wealthy in-laws

[dupcla]

It goes against your debt to income ratio. Keep the balances at zero and never use them.

Nothing good has come from credit cards ever.

[LES]

It goes against your debt to income ratio. Keep the balances at zero and never use them.

Nothing good has come from credit cards ever.

HMM I use a AMEX alot. Has to be paid off monthly and I get many benifits from the points. Why not use it to get plane tickets and or concert seating in a preffered section, upgrades for free on certain things.

Nothing good has come of ABUSED credit cards.

[93SVT]

It goes against your debt to income ratio. Keep the balances at zero and never use them.

Nothing good has come from credit cards ever.

I know that’s not the case, a correctly used card will add the your score, a never used card will not add to it, I was simply wondering if having a super small balance on them would be better then nothing, a $50 balance would mean like a $8 min payment a month, not exactly going to weigh heavily on your outgoing monthly debt, but I was told when they see 0 they can assume funny things and it can end up hurting you.

[Stormwalker]

Here's what I understand -


The best thing for you to do is to close the accounts.


When people say "a bunch of credit cards with a zero balance is bad", they are referring to the credit already available to you. A person with a set credit history (or score) has a sort of available credit "limit" (and I use this loosely), and whatever limit is on those credit cards eat into that overall credit available to a person. Lenders do not like to see a bunch of open credit accounts. From the lenders perspective; imagine that you accepted a loan, then started maxing out all these credit lines that currently have a zero balance. Not good. So the amount of money that they are willing to lend you will be reduced somewhat because of existing credit lines available to you. Don't worry about closing the accounts, your credit history will be fine (and will improve in many cases). This is also advisable for security reasons as well, if you have credit lines that are unused, closing them protects you from fraudulent activity.

[jnk111]

You can have too much available credit. Before my wife and I were married she was denied (at first, later approved) because she had too much available credit.



Nevermind stormwalker beat me to it.

[SFC]

Zero balance is fine, and stormwalker is spot on. The amount of lines you currently have open can have a negative affect on the score. If you have a bunch of cards you never use, close them out. I just did this recently. Don't forget, all those *store* cards show up as well, so if your wife is running around with a target card and a khol's card and everything else, might be worthwhile to close them out.

[PHRANQUY]

The best thing for you to do is to close the accounts.

Just thought I would mention I have been going through this, and just got all my pre-approval stuff out of the way... I was told by both my credit union AND another lendor that closing the accounts is bad, just to keep a minimum or no balance on them if possible.

[97SS_1341]

Close all but 1 card.. the one you have had open the longest or the card you used the most. They see how long the cards have bene open for, and useage. If you have had a card open for a long time they see that as stability.

Yes debt to income will effect your rate, yes having outstanding balances can effect your rate, yes having multple cards with 0 balance and high limits on them will effect your rate. There are a ton of factors that are concidered. They also look at your total assets, such as do you have investments? Are your cars paid off or are they "upside-down" on the loan? Do you have student loans or personal loans outstanding?

There are articles on the internet just google them MSN almost always has tips and tricks for credit scoring on them.

[TitaniumGT]

Yep. closing accounts is bad... I fucked myself when I bought my house because I had closed a couple credit accounts. I had annual fees that I didn't like when I was younger and my mortgage broker said I could have gotten a better rate if I had those accounts still.

On another note. Fuck home ownership... I got a call from the roomate today saying the basement was flooded.. I guess the main sewer run is blocked by tree roots and caused the sewer to back up in my basement... so I have that going for me. Which is nice... Houses are a lot of work.

[2 beer]

Yep. closing accounts is bad... I fucked myself when I bought my house because I had closed a couple credit accounts. I had annual fees that I didn't like when I was younger and my mortgage broker said I could have gotten a better rate if I had those accounts still.

On another note. Fuck home ownership... I got a call from the roomate today saying the basement was flooded.. I guess the main sewer run is blocked by tree roots and caused the sewer to back up in my basement... so I have that going for me. Which is nice... Houses are a lot of work.

holler if you need help biotch.