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How Cancelling Credit Cards Can Hurt Your Chances Of Buying A New Home

Potential homebuyers in the Capitol Hill and Chevy Chase, MD area often wonder about getting a mortgage and how credit cards impact their overall credit worthiness. When it comes time to buy a home, your credit score and credit report can make a big difference in the type of home mortgage you are offered. The varying types of home mortgages all offer different advantages, but no matter the type, you always want to make sure you get the best interest rate possible - which often times is based directly on your credit score.

The questions surrounding what impacts a credit score are plentiful, but one of the most frequently asked and perhaps the most confusing is canceling credit cards. You may hear some self-proclaimed experts telling people to cancel all of their credit cards when preparing for applying for a mortgage, but that is not always the best advice. Here is why.

Your credit score is based on how long you have had credit accounts open in part. A credit card that has been open for 20 years or more and carries a zero balance will help your credit score much more than a card that has been active for five years and has a $1,000 balance. The longer you prove you have the ability to resist the temptation of an open line of credit such as a credit card, the more credit-worthy you become - a very important factor when buying a home in the Trinidad neighborhood.

The other side of that somewhat confusing coin is the number of credit cards or open lines of credit you have available when applying for a mortgage to buy a home. If you have too many sources of credit open to you, you can damage your credit score as well. When you open a store credit card to save money on a large purchase or to finance a purchase - such as furniture or electronic equipment - with a "12 months same as cash" offer, those credit lines should be closed as soon as they are paid in full.

When it comes time to buy a home or apply for a home mortgage and you have more questions, contact Michelle Buckman today. Working in the industry for more than 10 years, Michelle knows what to expect and how to handle every real estate related question.