Is Cancelling Credit Cards Really Bad for Your Credit?
- Thread starter Ro_Laren
- Start date
Yeah, and it seems that different lenders are more willing to work with you than others, so I think I just need to do some more research. I'm currently renting the house I want to buy, so at least I have that going for me.
So why can't you get an FHA loan for that? Or is your intention to buy this house and rent it out, while you rent something else?
In the area where I live, being a landlord is a potential gold mine. And with this particular house, I could easily be making about $800/month profit after taking mortgage, insurance, and taxes into account.
I have no idea. This is just what the nice lady at the bank told me. Again, I have more research to do.Yeah, and it seems that different lenders are more willing to work with you than others, so I think I just need to do some more research. I'm currently renting the house I want to buy, so at least I have that going for me.
So why can't you get an FHA loan for that? Or is your intention to buy this house and rent it out, while you rent something else?
I've got a whole big long-term plan for this. It's just the short-term stuff that is getting in the way!
Well, if you can pull it off, more power to you.
Be very, very careful who you rent to--and I mean do credit checks, criminal background checks, the whole bit. It may not make you feel like a very good person but you have to protect yourself.
As usual, seconding everything RM says and just piling more on.
That $800/mo is great when you're getting it. Be sure you factor the months when you don't get it into your planning. You could go several months with no income from the property while you go through a lengthy eviction process and then wait to get a new tenant in there. I'd recommend you not take the profit for the first X* months and instead set that profit aside in a fund that is just for paying the property expenses if the property sits empty or a renter isn't paying.
*X being the number of months it takes to have a big enough fund for say 6 months or whatever you feel comfortable with.
That $800/mo is great when you're getting it. Be sure you factor the months when you don't get it into your planning. You could go several months with no income from the property while you go through a lengthy eviction process and then wait to get a new tenant in there. I'd recommend you not take the profit for the first X* months and instead set that profit aside in a fund that is just for paying the property expenses if the property sits empty or a renter isn't paying.
*X being the number of months it takes to have a big enough fund for say 6 months or whatever you feel comfortable with.
That's also a good point. It might be good to ask yourself, "Can I afford the mortgage on this house even if no one is renting it?" If the answer is "yes," I'd say you're in good shape there and not putting yourself at too huge of a risk.
I personally have had experience with this.
The thing is there are a couple factors involved because it's all about the length of credit history you have with that creditor.
I had a credit card that was under my mom's name and she had a 20 year history of making payments on time. When she put me on her credit card my credit score jumped up on average of about 20 pts, and when she took me off her credit card a couple years later my credit score jumped down 30 pts.
So the morale of the story is, if you have a credit card with a long payment history, you are better off keeping that card open. It's not just the track record you have of making payments on time, but it's also the length of payment history you have with that creditor.
The thing is there are a couple factors involved because it's all about the length of credit history you have with that creditor.
I had a credit card that was under my mom's name and she had a 20 year history of making payments on time. When she put me on her credit card my credit score jumped up on average of about 20 pts, and when she took me off her credit card a couple years later my credit score jumped down 30 pts.
So the morale of the story is, if you have a credit card with a long payment history, you are better off keeping that card open. It's not just the track record you have of making payments on time, but it's also the length of payment history you have with that creditor.
A question about this. Does adding someone with a bad score to your credit card damage your score at all, or does it only help out the person you've added?
Well, it does show up as another debt on the credit reports of both parties, and it will have whatever effect that debt would have if it was entirely yours. So, as long as it is paid on time it will not negatively affect you any more than it did before.
I am intrigued by this whole concept. I'm mostly thinking of ways to bump up my credit score without actually doing any work.
My parents have quite a few cards that have an excellent payment history that they've had for many, many years. Adding my name to their cards would theoretically raise my score, yes?
However, that would also show up as more debt and ruin my debt-to-income ratio even further, I would imagine.
I am intrigued by this whole concept. I'm mostly thinking of ways to bump up my credit score without actually doing any work.
My parents have quite a few cards that have an excellent payment history that they've had for many, many years. Adding my name to their cards would theoretically raise my score, yes?
However, that would also show up as more debt and ruin my debt-to-income ratio even further, I would imagine.
That's right. If you end up as a co-signer to their cards, then you get the benefits of their good credit, but also any negative consequences from having those debts on your report.
And if you ever miss a payment and they don't pick up the slack, you're hurting their credit.
This is why I do not co-sign for anyone.
Well, I wouldn't actually use their credit cards.
Yeah, but legally you would be allowed to, so they are still taking a risk!
If anyone has any other questions about credit and debt, I'd be happy to answer them. Most people don't seem to know much about how credit really works, or what their rights are. I've been around the block and I've also worked in the collection industry (don't kill me!)
I know someone who was irresponsible with credit a few years ago. As a result, a card with a $400 limit and something like $300 of debt on it went unpaid and was eventually charged off.
Since then, various collection agencies have been trying to collect. This person is eager to clean the slate and would take an opportunity to pay off the debt, but the agencies now want upwards of $1000 and that is not going to happen on principal.
Some months ago one of the agencies offered to clear the debt for the original amount, but at the time the person in question did not have the available funds and so the offer went disregarded. The debt has since been sold to a different collection agency.
What would the best course of action be in this case?
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