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Terravibe

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$0 Balance Credit Cards...keep them or close them?
I've set up my credit cards on a debt stacking system to get them paid off in preparation to buy a house. I've paid off one and closed the account. I'm about to pay off a second one and I'm not sure if I should close the account. I was told by one family member that I should close the accounts as they are paid off because mortgage creditors view the open accounts and debt potential. A second family member told me that I should keep them open to show financial responsibility by having accounts open for varying periods of time that are active and $0 balance. They said that the creditors view the debt-to-credit ratio. So, I'm at a loss. With all these terms flying around and differing opinions, I've no idea what to do. Can anyone give me some advise? Thanks in advance...

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Hang on to the cards.

Being granted credit, using it wisely and having more available credit than debt is very good and reflects well on your financial management.  Keep the cards and use them periodically, with usage below 20% and pay them in full when the bill comes in.  Hope you're able to get a nice, affordable house.

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Terravibe

How many credit cards are you talking about here?  If it is like a half a dozen or less in good standing, then pay them down under 20% and dont close them (at least not until after your mortage is funded).  If you are talking about a whole fist full of them, then I could see the point where that could be scary to a lender.

Each time you close one you will shrink your age of accounts number.  When I got my mortgage a couple years ago, the lender said dont do anything until after the mortgage is funded.

You need to be real careful in your situation who you take advice from.  If your number goes down but is still good, the lenders love it because then you still get the loan, but they have a reason to charge you a higher rate.  A loan officer is who you really want to get this advice from.  Get a list of all your accts and balances and ask him how to make it look best to a mortgage company.  Remember that the FICO number isnt the only thing they care about.  It is more of a starting point for lenders and depending on the lender and the nature of the loan, somethings will be more important to them than others.  If you are serious (as you should be), get in front of a lender (a lender, not the receptionist at the lenders office) and show them your info and let them guide you.  After the mortgage is funded you can make your adjustments of getting rid of cards you dont want, etc...   But I bet he is going to tell you not to do it until afterwards.

Good Luck

Rich

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