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Paying off credit cards

Posted by on Jun. 4, 2013 at 11:55 AM
  • 9 Replies

 DH and I are getting ready to apply for a home loan in a few months so I've paid off all his credit cards well most because dh says it will hurt his credit if I pay them full. So I kept a $50 balance on all his cards (5).

So my question is, is it better to leave a small balance on the cards or pay them all up completely?

by on Jun. 4, 2013 at 11:55 AM
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baconbits
by Bronze Member on Jun. 6, 2013 at 4:00 PM
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 I think it's better to pay everything off. If you have a bunch then you might want to close a couple. There's a fine line with mortgages. They want to see that you have credit but at the same time they don't want to see that you have a bunch of cards with nothing on them that as soon as you close on your loan you can charge up with home decorating. Talk to your future mortgage company to see what they think.

QuiltLover
by Jocelynn on Jun. 6, 2013 at 4:52 PM
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I agree with thr previous poster...if you have credit cards, you have the availability to that money you have been approved for them...Close all but one and pay it off every month, leaving no balance, but the card is open to use. That available credit will hurt your interest rate. Pay all your bills on time or a bit before they are due...Steady good payments records is what they look at....from your utilities to your car payment to even your last years rent...Protect what you owe and be diligent in your re-payments.

MIZZ.MOE
by Member on Jun. 7, 2013 at 7:24 AM
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I paid off all my cards except for 1 so the bank could see that I was still making monthly payments on something. I was told not to close any accounts it would bring my score down. I was approved for a loan with an interest rate of 3.5 on a 30 year fixed.

baconbits
by Bronze Member on Jun. 7, 2013 at 9:59 AM
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 Did the bank or did a friend tell you not to close the accounts? Do you have 3 or do you have 10 credit cards? Who approved the loan a bank or a mortgage company? If you're approved at 3.5 fixed you need to get that locked in NOW as they are saying the rates are going up. Talk to whoever is doing the loan and see what they say. If they say not to close them then don't but I still say that if you have a bunch of credit cards that you should close them. They're really tempting to charge up when you buy a new home because you just "have to have" new curtins, lawn mower, stove, fridge, furniture, carpet, hedge trimmers, landscaping, etc and having that credit available is really tempting. At the least I'd cut up the credit cards and just keep one good card with a great rate and a mid level credit limit.

rachel_2010
by New Member on Jun. 8, 2013 at 8:47 PM
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I think the bit where they tell you not to close accounts is bascially.... If you get a credit card when you are 20, keep it in good standing for 10 years then you get a new credit card, and close the old one

then you are 30 and want to apply for a mortage, there will only show one years credit card, not the ten years previous...

thatn's how it was explained to me, but i'm not a banker or anything!


Quoting MIZZ.MOE:

I paid off all my cards except for 1 so the bank could see that I was still making monthly payments on something. I was told not to close any accounts it would bring my score down. I was approved for a loan with an interest rate of 3.5 on a 30 year fixed.



Larsbug
by on Jun. 11, 2013 at 2:10 PM

 small balance...under 25% of what the limit is

blessed2bworkin
by Member on Jun. 12, 2013 at 8:55 AM
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My husband is a financial wizard at all of this stuff, the best thing you can do is not carry a balance. He will pay with the card, then pay it off in full at the end of the month. He will not have a balance, ever. We use cards for frequent flyer miles and other rewards, always paying off the balance. He will use it for things that we are paying for anyway, like gas and groceries to build up the rewards. His credit score is around 800.

mxmom2
by New Member on Jun. 12, 2013 at 9:56 PM

Girl, pay them off and cut up 3 of them!!! Keep the best 2 and only reason why I say 2 is for emergency purposes and like I use discover and not every one takes discover. Then PM me and I can help you with some supplemental money.. I am one of these I can budget everybody LOL... I like to :)

FindersKeepers
by Bronze Member on Jun. 14, 2013 at 12:29 AM
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We took a free first time home-buyer class the Consumer Credit Counselling organization.  The link below is for CA, but they have national locations so call them to find one near you. 

http://springboard.org/housing/HomebuyerEd

The information in the class was really good and nice because you could also ask questions specific to your situation.    Per the teacher for our class, the main thing you want to do is make sure that you don't do anything that lowers your credit.   (Ex. Applying for a credit card lowers your score about 5 points.)   So to decide whether or not to close a card depends on your situation.   Closing a card that has a lot of years of positive credit could lower your score since once the card is closed it will no longer appear on your credit report.   Bad credit says on for 7 or 10 years, good credit would disappear if you closed the account.   Having too much available credit can also be bad because a lender would look that it as if you maxed out everything, could you still pay your mortgage.   Our teacher said that in most cases it is best to leave cards open and charge something small on them every 6 months to show a good payment history.   However, everyone's situation is different.

Your first step should be to get pre-approved with a lender.   As they are going through your specific paper work, they will tell you what to work on.   We did this first.... the mortgage officer gave us a list of things to work on and we were able to buy a house about 6 months later, after we resolved the few things from the lender.

 

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