TO RESTATE MY QUESTION ON A FRESH THREAD.... I have a question. Several have stated how many cards they think are the "right" amount. But this would be for someone who OWNS thier own home. What is the correct amount when you are applying for a home loan?? I know they don't like too many. I know they don't like OPEN high limit cards sitting there with no balance on them. (too much potential money to spend). They don't like large balances on the open cards, or cards right at or near the limit. I have 8 cards. 3 with zero balances, but open with $ 22,100.00 available 1 with 50% 1 with 63% 1 with 70% 2 with 80% So who knows? By the way the equity loan I am applying for is to pay off most of these and close them along with buy out 2 family members for a house. Hopefully the bank will realize this when qualifying me.
I don't think there is a generic answer anyone can give you here. If you go to see a mortgage broker, then he/she/it can tell you what their experience has been with different lenders and could suggest what you should do.
An after thought.... Right now my debt ratio is at 47% If I close the paid off accounts, it raises to like?? 70% or something. I think they make this so hard that we will never figure this out. Which hurts more... open accounts with no balance..or higher debt ratios? PS: has anyone read the e-mail letters on the site Greg Fisher puts in his posts. I can make you almost sorry for the CRA's. His letters are AWSOME.
I feel that ideally you should have 4 or 5 major cards, but I don't think 8 is too much either. I think the most important thing is to keep the balance / limit ratio down (preferably below 10%) and that should improve your score. It is good to have 0 balances on higher limit cards because it will lower your total debt ratios. The lenders mainly look at your income and score so as long as these are fine, they'll will not go into the nitty gritty.
I had 9 accounts with credit lines nearing 100k when I got my mortgage in October. Some of these accounts did have a 0 balance. My lender did not question the number of account, my balances, or my limits. I would not close any accounts if it would dramatically affect to debt to limit ratio. It does not hurt to have 0 balance accounts.
Judy,you may think about a bt from one of the higher bal cards to the ones under 50%. You may get a better fico if you have 5 cc's under 50% utilization rather than 2-3 over 70% and two at zero. I'm not sure I would close any yet.Knowing your fico score would give a better idea of best moves. If you do have to go thru a manual underwriting and they come back saying they feel you have too much of a unused cl, I would call each cc company and ask if you lower your credit limit on their card , can you come back to your original credit limit if you change your mind in say 3-6 months. The answer is probably yes.If they say no then ask if you close the acct if its possible to reopen the acct verbally over the phone in the same 3-6 month period. Good luck. VJ
