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Myths and truths about your credit history

Myths and truths about your credit history

If you’re buying real estate, it’s pretty obvious that you need to prove to Tampa Bay mortgage lenders that you have a good credit score and are responsible. But many myths persist about what is good and what is bad for your credit. To that end, here are some ugly credit history truths that are commonly misconstrued:

Truths

Don’t close credit cards that have established a history for you; if you close the cards you are shutting the door on the history you created.

The only time you want to close a credit card is in extreme circumstances like on a joint account, post-divorce.

The more available credit on an individual card the better the reflection on your score; if you close the account, so goes that extra icing on your credit profile.

Closing a card with a bad history will not erase the bad history. Watch your balance to credit limit ratio; just because you are given a credit line doesn’t mean you should hit the stores hard. Target that debt saturation to be no more than 50% of the credit limit – neither underwriters nor credit reporting companies like maxed out cards.

Be careful of the “spouse in the house syndrome” – you may have given your partner the heave-ho and have the divorce papers to prove it, but that means nothing to the underwriters or creditors, they still want you to be clean and sober credit-wise and understand that you’re still on the hook for any debt that you signed for.

Fair warning to any divorcee: if your ex-spouse is named the responsible party for debt that was incurred jointly, do yourself a favor and keep close track on the progress of that repayment; it will come back to take a big bite out of you and your credit score if he or she defaults. At the end of day, take your credit seriously, and it will take care of you.

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