Too Many New Credit Cards, Your Credit Score, and Mortgages

Basics

Your credit report will list your creditors by:

When the credit line was opened the maximum available balance the current balance on the credit line your credit line lines on a credit report are any extension of credit that has been made to you, such as a credit card, department store card, car loan, or student loans among other creditors. When The Credit Line Was Opened This is the month and year the new line of credit was extended.

Even if you applied for a credit card only recently it is quite likely to show up on your credit report. Creditors often report data to credit bureaus quite quickly, and that is how your credit report remains up to date. Don’t count on a new line of credit not showing up on a credit report. It may not show up, but it often will.

Maximum Available Balance

Your credit report will state what the maximum available balance is for each credit line. If you add five credit cards and each of them has a maximum available balance of $10,000 then you have just increased your available credit by $50,000.

From a mortgage lender’s perspective additional available credit represents a potential risk to them. If you take on too much additional debt you may not be able to pay your mortgage properly.

Current Balance on Credit Line

Your credit report will list your current balances on each credit line. It is usually up to date. If you have a lot of new credit and have started to use it, your credit card balances may show up on the new credit report.

Improving your Credit Score - The 5 Things You Can Do

By Anik Singal

Were you recently denied for a loan or a credit card? When you apply for a loan, there are only a few factors that actually impact whether you get approved not. A part of the decision is based on the information you submit to the organization, however a much larger portion of the decision is based on your credit score.

So, if you were declined for a loan, it is very likely simply because you have a bad credit score. The main way to get a bad credit score is to have a lot of open credit or to have had a lot of late payments (in some cases, no payments made at all).

Financial institutions such as banks, car companies, lending agencies, credit cards and many others use your credit score as a wage of your ability to pay off the credit card. Not only can having bad credit work against you, but also NOT having any credit can be bad.

You would think that not having debt would be a positive thing, however, if you have no debt, no credit card, then there is no way for the credit reporting agencies to track your ability to pay - so that is why it can actually be recommended to get a credit card with your name on it when you’re young (just make sure the limits are very low and that you pay off every penny on time).

The factors that work against your credit score are the following:

1. The number of accounts opens

2. Any late payments with your credit card bills.

3. Any payments not made

4. Any reported liens against you

5. Any financial claims against you

Most of the larger organizations will quickly report you to the credit agencies when you fail to pay them on time. This is mostly there way of making sure you pay them, or else they can really hurt your credit.

The worst of it is when your credit report is hurting when it was not even your fault. Yes, identity theft and/or wrong reporting by a financial institution happens all of the time.

This is precisely why the government has made a law that allows you to see your credit report once a year at no cost from all 3 of the major reporting agencies.

So how do you improve your credit report?

1. Pay off as many debts as you can and close accounts.

2. Solving any disputes against you.

3. Checking your report once a year and making sure all claims are true - dispute anything that is false.

4. Never leave a credit card open unless you are using it - even if you have no debt on it.

5. Never make late payments.

Always remember that you can easily improve your credit rating even if it is bad right now.

Learn more about how to debt consolidation and improving your credit score. We have over 1,000 articles all focused on helping you improve your personal finances, reducing your debts and increasing your credit score.