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Cherrievc

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Banker wants me to close c/c accts
I am in the process of refinancing my house. One of the stipulations of the lender is that I pay off and CLOSE all accounts including several credit cards and an auto loan. My score is 697 according CreditKarma (645 according to banker). I am not sure if this is good advise. But wanted to pull some extra cash out of home to do some repairs that are necessary and yes, pay off some debt... but close everything?????? I didn't think this was supposed to be good for my history or score. Also it's pretty hard to do a lot of things without even one single card. Please let me know if this is good advise and what the reasoning would be and what alternatives I have.

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Care to risk your house?

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Apparently your banker has seen a trend with the credit cards that makes him nervous, which is why he wants you to close the credit cards.  In addition, is your comment that you want to take some of the re-fi money to make needed repairs (good usage) and to pay off the credit cards and auto loan.  The credit cards are what we call "unsecured" debts because there is nothing that you buy with credit cards that could be repossessed and sold to regain some of the monies owed.  If you held on to the credit cards, you would likely use them again, get into debt to where something may not get paid (the mortgage) and the bank would have to go through the hassle of doing a foreclosure.

Think that can't happen?  Your banker knows otherwise, which is why he wants the cards closed after paying them off.  Yes, it may cause a bit of a hit to your credit score but not nearly what a foreclosure would do!

You may wish to discuss this with him to find out his reasoning on this closure but I'm sure it's because he kept up with financial journals that report and advise bankers on such problems.  They don't like taking unnecessary risks.

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