Credit Score Question...

**Luv2BeFrugal** · 07-05-2007, 07:30 PM

Ok, here's the situation... Dh and I would like to buy a house in 2-3 years (after he's out of school and into a post-graduation job and we've had a chance to pay off a bit of the student loans).

I'm getting conflicting info (depending on the source) as to how to handle our credit cards...

We have 3 - all with very high limits (not maxed or anything...one has nothing on it). I've heard this can affect how much the mortgage companies will loan you (because in effect you could go out the next day and max them)...but I've also heard that reducing the credit lines or closing the accounts can lower your credit score.

So, which is better to do? We have good credit right now and I want to make sure it STAYS that way...

Thanks for the help!

**Telephus44** · 07-05-2007, 07:40 PM

I struggle with the same question - based on everything I've read, having a lot of cards with high limits doesn't hurt your score significantly - it's really up to the lender to take a look at your whole report and decide if having that much credit available to you is something they want to consider a negative when granting a mortgage. This is part of the reason that we want to go with a local bank or credit union that doesn't sell their mortgages, and actually considers you as people (but that's another rant!).

I have also considered calling up one of the lenders (that gave us a $17,000 limit) and asking them just to lower the limit. Since the last credit scores DH and I pulled were fairly high (between 720 and 750), I'm not as worried about it. Have you considered this? You wouldn't lose the credit history for cancelling the card.

**Luv2BeFrugal** · 07-05-2007, 07:52 PM

Originally Posted by Telephus44

I struggle with the same question - based on everything I've read, having a lot of cards with high limits doesn't hurt your score significantly - it's really up to the lender to take a look at your whole report and decide if having that much credit available to you is something they want to consider a negative when granting a mortgage. This is part of the reason that we want to go with a local bank or credit union that doesn't sell their mortgages, and actually considers you as people (but that's another rant!).

I have also considered calling up one of the lenders (that gave us a $17,000 limit) and asking them just to lower the limit. Since the last credit scores DH and I pulled were fairly high (between 720 and 750), I'm not as worried about it. Have you considered this? You wouldn't lose the credit history for cancelling the card.

I'm not too worried about the score, but at the same time don't want it to drop too far (Dh is 834 and I'm 755). I was told that lowering the limit can reflect badly on your score. I wonder how "badly" and how long it would take to bring it back up?

Really I'd like to only have ONE card to mess with (statements and such)... We definitely want to keep one for online purchases and traveling. We don't *need* all 3. I just don't want our scores to plummet and mess things up for home buying time (even though it's a couple years away).

I wish it wasn't all such a screwed up system...

**cheriede** · 07-05-2007, 09:12 PM

I have always heard that closing accounts can end up hurting your credit score. If you close accounts, then you will be raising your balance-to-limit ratio.

**Denvergirlie** · 07-06-2007, 10:20 AM

Close one, keep the other two. It's going to be YEARS before you buy, it might "ding" your credit in the short term, next 6-12 months, but should have no effect in a few years.

**my4littlebuffaloes** · 07-06-2007, 03:59 PM

I would close one now too. It won't matter in a few years what you closed now. Good luck!

Jennifer

**chatterweb** · 07-07-2007, 12:14 AM

As long as your credit scores are above 760, you will get the best interest rates.

I have $85000.00 in credit card lines, but I am utilizing $2600.00.

This is very low.

DH has $48000.00 in credit card lines.

He is borrowing $22000.00 (see my thread in supplemental income)

The amount of credit lines has no effect on how much one can borrow.

How much debt one owes does.

**chatterweb** · 07-07-2007, 12:17 AM

Originally Posted by cheriede

I have always heard that closing accounts can end up hurting your credit score. If you close accounts, then you will be raising your balance-to-limit ratio.

Keep the credit lines opened unless of fraud alert, then close them.

Use the older cards 1 time a year to raise your score, just buy 3 bucks of gas or use it to pay a bill to avoid the card being closed for non use. Never close older credit lines! It will hurt your score, since credit scoring considers how long you have established credit!

**Telephus44** · 07-08-2007, 12:33 PM

Originally Posted by chatterweb

As long as your credit scores are above 760, you will get the best interest rates.

I definitely agree with this - if your scores are already as high as they are, then I really wouldn't worry about it - the last couple points are going to get you a deal that's any better.