This week's book giveaway is in the OO, Patterns, UML and Refactoring forum. We're giving away four copies of Refactoring for Software Design Smells: Managing Technical Debt and have Girish Suryanarayana, Ganesh Samarthyam & Tushar Sharma on-line! See this thread for details.
cool. Came to know that there are many credit cards in my name with no activity for many many years. Guess I need to call them and officially close them down. I understand having too many credit cards is a liability when looking for mortgage. (yes I am in USA)
Ravi Shankarappa wrote: I understand having too many credit cards is a liability when looking for mortgage. (yes I am in USA)
Actually, its not really the number of cards that is a bad thing (tm).
Its the sum of the unused credit limits across all cards, lines of credit, car loans, etc.
A mortgage broker wants you to owe money only to them, no one else.
If you have outstanding balances on credit cards, loans, etc. those are all technically liabilities for you. When you have unused credit limits, its not technically a liability for you today, but could be in the future.
Remember, a banker is a guy who lends you an umbrella on a sunny day, and is happy to let you keep it as long as it is sunny. As soon as it starts to rain, they want it back.
Actually, that used to be true, but isn't anymore. Unused credit is now considered somewhat of an asset as it lowers the ratio of what part of that credit is in use. Credit scoring advisers now say to not close unused credit accounts to keep the ratio low.
Bear Bibeault wrote:It's a black art that makes no sense.
I have not kept up with the details of the smoke and mirrors used for this.
I used to argue that unused lines of credit were good things, and was constantly told I was wrong. I think I'm glad that Fair-Issac, et al have changed to agree with me.
The key thing is that the mortgage folks want your current outstanding loan amounts to be tiny, and your income to be big. They also like it a lot if you have a ton of money in the banks or brokerage houses. Which means they want you to be so rich you don't need the mortgage.
Of course, these are the same folks who issued millions of mortgages that were to folks too poor to qualify for loans, the so-called "sub-prime" business. They they were shocked,
shocked when the poor folks couldn't afford their loans when the economy went sour. Yo, Bankers, if they couldn't afford the house before, why do you think they can afford it now that they have lost their jobs?