How Your Total Credit Lines Affects Your Mortgage

Summary

Your credit score is affected by how many credit lines you have.

If you have too many credit lines and you are not using them properly your credit score will likely go down.

A higher credit score allows you to get approved for the loan you want, and at a better interest rate.

This can save or cost you thousands of dollars.

Basics

Your total number of credit lines is evaluated by:

• type of credit line

• number of credit lines

Type of Credit Line

Your credit lines come in several types, including:

• credit cards

• car loans

• mortgages

• students loans

• others

Your credit cards are revolving debt that you can pay off and incur again.

Your mortgage credit line is a critical component. This credit line is the one lenders will view most critically. Being late on a mortgage payment can be a red flag to mortgage lenders. It is still possible to refinance for borrowers, sometimes even after a borrower has been late by 60 days or more.

Large available credit card limits are also a factor mortgage lenders will look at.

Late payments on your student loans can show up on your credit report and affect your credit score.

Number of Credit Lines

Too many credit lines may be an issue for mortgage lenders.

If you have lots of new credit cards with no balances a lender may be worried that you will run up large balances on them. This is a risk they need to measure when deciding about whether to approve your mortgage or not.

Lenders will also look at your mortgage lines and reconcile it to the properties you own.

Many credit lines with large outstanding balances are also a financial factor that lenders will look for.

A lender will evaluate a potential debt consolidation loan by seeing if they can pay off some or all of the outstanding consumer credit debt.

For more help on credit, visit our website.