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Guest
0.10 Dollars($)
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 Posted: Sat Nov 01, 2008 11:57 am Post subject: Does Cash Out Refinance Debt Consolidation Loan Lowers CR? |
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If i refinance for more, pay off all credit cards will the credit score go down?
What if i keep the cards open? How does that affect credit score?
What if I close the cards? How does that affect credit score?
Credit score is very important to me at this point, so if you can explain the effect that would be very helpful.
Thanks guys!
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 bearboysj
Joined: 25 Oct 2008
Posts: 42
17.02 Dollars($)
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| Posted: Sat Nov 01, 2008 11:17 pm Post subject: |
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The ideal credit user is going to have an installment trade (mortgage/car) and 2 revolving credit cards with the credit cards never exceeding more than 45% usage. It's always good to make sure you pay your credit cards off each month but its also good for credit scores to see that you have the ability to handle the revolving debt - once you get abvoe the 45% mark then you fall into the category of high credit user which means you are living beyond your cash means.
On your initial refinance and paying off your credit cards - your score should go up, but like I said in the above - its better to have a balance.
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kenne232
Joined: 02 Nov 2008
Posts: 2
1.98 Dollars($)
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| Posted: Sun Nov 02, 2008 3:40 pm Post subject: |
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| If at all possible my recommendation would be to not pay off your credit cards with a cash out refinance. The mortgage company will recommend it to gain a sale and they will sell you on your cash flow savings per month. You will be paying for the debt on the card(s) over a 30 year or 15 year period (which ever your loan term will be). If you chip away at your credit card debt as much as possible and eventually pay it off, it will be gone completely and you will not have to pay for it the whole life of the new home loan. The first post is correct about keeping the balance low compared to the limit, but if you have enough history, a zero balance would be the best thing. If you close the cards it will effect your score in a negative way. You will want to keep them open no matter what (but just not use them). If you are in dire need of a lower total payment per month you might have to do this refinance. If so, the most important thing is not ever getting the balance up again because then you would have a higher mortgage and just as much credit card debt. |
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smithsussane
Joined: 18 Sep 2008
Posts: 2658
Location: Alaska
379.95 Dollars($)
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| Posted: Sun Nov 02, 2008 9:08 pm Post subject: |
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Hi guest!
Welcome to the forums!
As far as I have heard, keeping the credit cards open will have a positive impact on your credit score whereas closing them will negatively affect your score. You should always pay off the credit cards every month which will also have a positive impact on your credit score. To know more about credit score, visit the given link:
http://www.mortgagefit.com/credit-scoring.html
Feel free to ask if you have further queries.
Sussane |
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