Should You Close an Unused Credit Card Before Buying a Home? Think Twice With Travis Egan
A Zero Balance Card Can Still Be Valuable
A credit card with a zero balance could still be worth keeping open. Travis Egan wants veterans and military families to understand how closing an unused account can affect their credit right when it matters most.
How Closing a Card Can Hurt Your Score
Closing an older credit card reduces your total available credit. When that happens, the portion of your available credit that you are using, known as your credit utilization ratio, can go up. A higher utilization ratio can lower your credit score, which may affect the mortgage credit score a lender uses to price and approve your loan.
Don’t Close Accounts Just Because You Aren’t Using Them
If you are preparing to buy a home, resist the urge to clean up your accounts by closing cards you no longer use. An older account can also help your credit history length. Closing it may not save you anything, and it could work against you at exactly the wrong time.
Review Your Credit Before Making Changes
Every credit profile is different, so the best move depends on your balances, limits, and account history. Reviewing your credit with a loan officer before making changes helps you avoid steps that could hurt your approval or your rate.
Have Questions About Your Credit?
If you are planning a purchase and want to know how your accounts look, reach out to Travis Egan with your questions. He is here to help. Semper Fi.
Sources
VA.gov
BenefitS.va.gov
ConsumerFinancialProtectionBureau.gov
MyFico.com
Investopedia.com
