credit question

[bla_3x]

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Hello, my wife and I will have our various credit cards paid off this year. Now, we don't have a ridiculous amount on each card… couple of 5K cards, 3K cards etc.
My Question stems from conversations that I have had with some residents and docs regarding this issue.

Some say that it is better for your credit score to cancel all but like one or two b/c a lot of empty cards puts you at "high risk" for bad credit.
Others say that just paying off your cards is good enough for your credit.
What is the best thing to do once you have paid off your cards?
If anyone has actual experience or knowledge in this area it would be greatly appreciated

 

[Laryngospasm]

I believe that you get a higher credit score by keeping the cards open, as you have a large amount of credit available but not used, I think it may also help to use the cards occasionally and then pay them off that month, for gas food etc. Not sure on that last thing though.

Hello, my wife and I will have our various credit cards paid off this year. Now, we don't have a ridiculous amount on each card… couple of 5K cards, 3K cards etc.
My Question stems from conversations that I have had with some residents and docs regarding this issue.

Some say that it is better for your credit score to cancel all but like one or two b/c a lot of empty cards puts you at "high risk" for bad credit.
Others say that just paying off your cards is good enough for your credit.
What is the best thing to do once you have paid off your cards?
If anyone has actual experience or knowledge in this area it would be greatly appreciated

 

[proman]

Keep them open (assuming no annual fee). You are a much better credit risk if you owe 5K on a total of 30K total credit than if you owe 5K on 6K total credit.

 

[12R34Y]

Keep them open (assuming no annual fee). You are a much better credit risk if you owe 5K on a total of 30K total credit than if you owe 5K on 6K total credit.

What he said. just talked to a mortgage guy last week. He said you look much much better if you have 30,000 in credit, but are only using say 2,000 of it.

they now look at the percentage of available credit that you have to determine your risk.

If you have 30,000 in credit and you are using 27,000 dollars of it then that doesn't look good at all.

later

 

[bla_3x]

Understood!
Thanks everyone!

 

[kittycat_642]

Speaking of credit, how do my 150k+ student loans effect my credit? I realize it's not the same as a credit card, but will it lower my credit score?

Thanks

 

[bla_3x]

Speaking of credit, how do my 150k+ student loans effect my credit? I realize it's not the same as a credit card, but will it lower my credit score?

Thanks

I would be interested in this as well.
I will have the full stafford amount (somewhere around 185K and about 33K in private student loans. Does the fact that these are student loans help? Will the credit Co know/care?

 

[monkey7247]

The loan companies are well aware of the differences between student loan debt and credit card debt. Student loan debt does not affect your score much at all. However, most companies will still factor in a student loan payment when assessing you debt to income ratio. I'm not sure if producing a deferrment paper removes this inclusion. Either way, most people seem to be getting home loans with ease.

 

[12R34Y]

Speaking of credit, how do my 150k+ student loans effect my credit? I realize it's not the same as a credit card, but will it lower my credit score?

Thanks

I also asked about this with my mortgage guy. YES, having 200,000 dollars or whatever of student loans does in fact adversely affect your credit score just by the shear amount of debt. Not hugely, but it doesn't help you at all.

Secondly, when looking at debt:income ratio they look at your gross monthly income before taxes and also at your minimum monthly payment on credit that is outgoing.

So, if you have 20,000 dollars in credit card debt, but the minimum payments only add up to 350/month then your debt is 350/month. car payments etc.. are also included.

don't include things like rent, utilities, groceries etc... just minimum loan/month payment.

my company requires this number to be less than 38% to qualify for a home loan.

meaning you can't have more than 38% of your gross monthly income go towards debt.

Most companies will look at your minimum monthly student loan payment EVEN IF IT IS IN DEFERRMENT as part of your monthly debt. so you can see how this is not good sometimes.

There are several banks that do doctor loan programs and do NOT include your student loan debt IF IT is in deferrement.

later