Jump to content

How much does available credit hurt you on an loan app?


Dirtyhip

Recommended Posts

Like, maybe you have a few credit cards, but owe next to nothing on them.  Credit cards love to give you this HUGE amount whenever you apply.

I assume a bank would look at the person and their ability to pay the loan, and credit history to see what kind of people he or she is.

I also assume that banks know that people hold multiple credit cards and use them for points at different places.

Adulting is complex.  Lots of assuming in this thread.  HAHA

 

 

Link to comment
Share on other sites

4 minutes ago, ChrisL said:

Isn’t several maxed cards worse than available credit?

Yes.  However, I just added up all of our credit limits.  I wondered how they look at that available credit.  Like, I wondered do they imagine that if all their credit was utilized, and count that as availability to pain the new loan.  We never carry forward a balance.  Interest is baloney.  I hope I don't need to borrow anything, but I am preparing for worst case scenario for the build.  I always consider worst case scenario.  @Philander Seabury

11 minutes ago, maddmaxx said:

No.......my score is in the 800s.

No what?  No to credit?  If you have 800's you must have some sort of credit history.

 

Link to comment
Share on other sites

4 minutes ago, Dirtyhip said:

Yes.  However, I just added up all of our credit limits.  I wondered how they look at that available credit.  Like, I wondered do they imagine that if all their credit was utilized, and count that as availability to pain the new loan.  We never carry forward a balance.  Interest is baloney.  I hope I don't need to borrow anything, but I am preparing for worst case scenario for the build.  I always consider worst case scenario.  @Philander Seabury

No what?  No to credit?  If you have 800's you must have some sort of credit history.

 

That was for those who might assume that I hate credit score companies because mine is bad.  I have a great credit history.  It can be damaged for the strangest reasons though.  A few years ago I was warned that my credit score had dropped by about 50 points.  The reason.......I was looking for a low interest loan to buy a car and the asshats at the dealership called 14 different banks to look for good loans.  Each check dinged my score.  I never took the loan and still got hammered just because of the checks.  The score was back up but it took about a year.

Credit scores are a scam and people make money on an imaginary product.

  • Heart 1
Link to comment
Share on other sites

7 minutes ago, Dirtyhip said:

Yes.  However, I just added up all of our credit limits.  I wondered how they look at that available credit.  Like, I wondered do they imagine that if all their credit was utilized, and count that as availability to pain the new loan.  We never carry forward a balance.  Interest is baloney.  I hope I don't need to borrow anything, but I am preparing for worst case scenario for the build.  I always consider worst case scenario.  @Philander Seabury

I don;t think even I would worry aboot that.  There are plenty of others things to worry aboot contingency plan for.

No what?  No to credit?  If you have 800's you must have some sort of credit history.

I think he meant no to he is not griping abooot RICO because he has a low credit score,it is because he thinks they are swindlers with a made-up product.

 

 

Link to comment
Share on other sites

I think at some point a lender would consider the amount of available credit in evaluating whether to grant a loan, especially an unsecured loan. But other factors would count as well including credit score, credit hisotry etc.

Link to comment
Share on other sites

1 hour ago, Dirtyhip said:

Like, maybe you have a few credit cards, but owe next to nothing on them.  Credit cards love to give you this HUGE amount whenever you apply.

I assume a bank would look at the person and their ability to pay the loan, and credit history to see what kind of people he or she is.

I also assume that banks know that people hold multiple credit cards and use them for points at different places.

Adulting is complex.  Lots of assuming in this thread.  HAHA

 

 

Paying our card balance every month has helped our loan value, not harmed it.

  • Heart 1
Link to comment
Share on other sites

40 minutes ago, Dirtyhip said:

Yes.  However, I just added up all of our credit limits.  I wondered how they look at that available credit

The bank wants you to borrow from them, and pay them the loan interest. Credit cards don’t figure into their loan amounts. But the bank does look at your payment history. On time and in full, they call that “a slam dunk.” 

Link to comment
Share on other sites

9 minutes ago, Kirby said:

I think at some point a lender would consider the amount of available credit in evaluating whether to grant a loan, especially an unsecured loan. But other factors would count as well including credit score, credit hisotry etc.

This is where my mind is at.  

If someone has enough assets on the sheet to well cover the new loan and maxed credit cards, I think I would be golden.  

The new loan has an application fee.  It isn't much, but I am trying to set my mind at ease to write the check and apply.

  • Heart 1
Link to comment
Share on other sites

1 hour ago, Dirtyhip said:

Like, maybe you have a few credit cards, but owe next to nothing on them.  Credit cards love to give you this HUGE amount whenever you apply.

I assume a bank would look at the person and their ability to pay the loan, and credit history to see what kind of people he or she is.

I also assume that banks know that people hold multiple credit cards and use them for points at different places.

Adulting is complex.  Lots of assuming in this thread.  HAHA

I didn't ask the bank about their review process.  I just gave them what they wanted. Just about my entire financial story.  Like you said, I'll guess they look at the people and their ability to pay the loan.    After the bank told me they will approve my loan, then I signed the contract to build the home.   

And I had home owner's insurance ready for day 1 of construction. 

1 minute ago, roadsue said:

Paying our card balance every month has helped our loan value, not harmed it.

This...

Link to comment
Share on other sites

Zero impact on your application. Lenders look at your credit score as a gauge of risk; how likely are you to pay back the loan. The higher your score, the lower the risk to the lender. Credit scores are rated into groups. A+, A, A-, B+, etc. the higher groups receive lower interest rates and more approvals. Credit scores are formula driven. Debt to income ratio, years of employment, own a home or rent?, credit available, credit outstanding, payment history are some of the factors in the equation. A lot of unused credit will boost your score. You’re good. 
@maddmaxxis wrong. Credit scores are used for risk pricing credit. Lower score equals a higher interest rate as the risk of non payment goes up. 

Link to comment
Share on other sites

2 minutes ago, roadsue said:

The bank wants you to borrow from them, and pay them the loan interest. Credit cards don’t figure into their loan amounts. But the bank does look at your payment history. On time and in full, they call that “a slam dunk.” 

Thank you, Sue.

I am feeling more confident.  I worry about things.  

Link to comment
Share on other sites

4 minutes ago, Old No. 7 said:

Zero impact on your application. Lenders look at your credit score as a gauge of risk; how likely are you to pay back the loan. The higher your score, the lower the risk to the lender. Credit scores are rated into groups. A+, A, A-, B+, etc. the higher groups receive lower interest rates and more approvals. Credit scores are formula driven. Debt to income ratio, years of employment, own a home or rent?, credit available, credit outstanding, payment history are some of the factors in the equation. A lot of unused credit will boost your score. You’re good. 
@maddmaxxis wrong. Credit scores are used for risk pricing credit. Lower score equals a higher interest rate as the risk of non payment goes up. 

Thanks.  I thought so, but got nervous with the application.  I never added up all of my available credit card dept.  

and <rant>  the application fields are too small for account numbers and info. 

Link to comment
Share on other sites

Just now, Old No. 7 said:

Don’t worry, you’re probably A+. 

Don't worry?  OOF! That's a tough one for me.

My husband may have been frustrated with me.  We had a family meeting on the numbers. He kept adding the equity in this house.  I kept arguing that you can't count that, because nothing is available until it is sold. I need to know that weI can pay for the build, if our home doesn't sell. 

Link to comment
Share on other sites

We were in the same boat you are now when we got our last mortgage.  The lender merely commented on "You have a bunch of cards you never use, you should close those. "

She explained that they can consider how much you CAN pay, not how much you do pay..., for example a worst case scenario..., if one or both lost income and all cards became maxed out, could  you still make the mortgage payment and the required minimum payment on each maxed card.  She saud it was not an issue but still a good idea to shut them down if we did not need them.

But then again, our mortgage/banking system is different than yours

Link to comment
Share on other sites

3 minutes ago, Zephyr said:

We were in the same boat you are now when we got our last mortgage.  The lender merely commented on "You have a bunch of cards you never use, you should close those. "

She explained that they can consider how much you CAN pay, not how much you do pay..., for example a worst case scenario..., if one or both lost income and all cards became maxed out, could  you still make the mortgage payment and the required minimum payment on each maxed card.  She saud it was not an issue but still a good idea to shut them down if we did not need them.

But then again, our mortgage/banking system is different than yours

If we maxed out all the cards and took this loan, we have enough assets to liquidate and pay everything off again. 

However, I would not want to liquidate our other assets.

Closing cards is tough too.  You don't want to close an old one.  Credit history is important too.  

BAH!  So complex.

  • Heart 1
Link to comment
Share on other sites

3 minutes ago, Zephyr said:

We were in the same boat you are now when we got our last mortgage.  The lender merely commented on "You have a bunch of cards you never use, you should close those. "

She explained that they can consider how much you CAN pay, not how much you do pay..., for example a worst case scenario..., if one or both lost income and all cards became maxed out, could  you still make the mortgage payment and the required minimum payment on each maxed card.  She saud it was not an issue but still a good idea to shut them down if we did not need them.

But then again, our mortgage/banking system is different than yours

She may have said it was not a problem but it was noticed.  That means that it can be a problem.

 

I still want old7 to explain to me why my score takes a hit when someone does a credit check.  That just seems to be BS and completely divorced from the reality of my credit.  Up till recently checking your own score caused it to drop......to the point that one credit score company tried to sell the idea that it wouldn't with them.  Where's the profit in telling people that with your company the score won't drop when you check?  What sort of business model is in play here.

  • Heart 1
Link to comment
Share on other sites

@maddmaxx A score drop of 50 points for 14 credit inquiries isn’t much of a hit. Especially since your score will bounce back up if you didn’t take the loan. If you did take the loan, that goes into the formula and DTI will bring down your score. Excellent credit is 800-850. Very good is 750 to 800. You weren’t affected by the 14 inquiries unless your neighbors started sneering at you, if so, you’ve got bigger problems 

EAAFDF0A-1A7F-494A-B667-59CDE8762996.jpeg

Link to comment
Share on other sites

From what I know (and it ain't much) that having too much available credit is bad, and having your CC's maxed out is bad. No one knows the equations used to calculate a score, so its all hear-say, and think-say :D Length of an account is good too. I have one CC that I've had since 1996 w/a limit of 16k. It was >20K at some point, but I lowered it. I buy what I can afford to pay back, albeit loans or bills.  BoA scores me monthly via Experian, and my score is 829. It's always been high. Credit is nothing I've ever thought aboot.

Link to comment
Share on other sites

iirc one of the factors in calculating your credit score is the % of your total credit used. So if you are at 50% of your total credit used that brings your score down. 

This from Clark Howard explains Utilization ratios

https://clark.com/credit/5-sneaky-ways-to-increase-your-credit-score/

IMO the scam is using credit reports for Home insurance or car insurance. WTH does one tell you about the other "risk" profile?

Link to comment
Share on other sites

1 hour ago, Old No. 7 said:

@maddmaxx A score drop of 50 points for 14 credit inquiries isn’t much of a hit. Especially since your score will bounce back up if you didn’t take the loan. If you did take the loan, that goes into the formula and DTI will bring down your score. Excellent credit is 800-850. Very good is 750 to 800. You weren’t affected by the 14 inquiries unless your neighbors started sneering at you, if so, you’ve got bigger problems 

EAAFDF0A-1A7F-494A-B667-59CDE8762996.jpeg

A drop of 50 points because others check my credit isn't much of a hit?  I'll have some of what you're smoking.  It's pure BS by an artificial industry.  It really pisses me off.  Get off my lawn and out of my life.  They're just going to get hacked and give away all my personal data someday........and I won't get any recompense for it.

 

No wonder I think it's a scam.  There must be lawyers and hedge fund owners involved.

Link to comment
Share on other sites

30 minutes ago, maddmaxx said:

A drop of 50 points because others check my credit isn't much of a hit?  I'll have some of what you're smoking.  It's pure BS by an artificial industry.  It really pisses me off.  Get off my lawn and out of my life.  They're just going to get hacked and give away all my personal data someday........and I won't get any recompense for it.

 

No wonder I think it's a scam.  There must be lawyers and hedge fund owners involved.

My point is that 14 credit inquiries in one  day is a lot. That WILL effect your credit score. Sorry you don’t like it but I am confident that you suffered no loss from that other than a truck load of butt hurt that you carry to this day. 

Link to comment
Share on other sites

5 hours ago, Zephyr said:

if one or both lost income and all cards became maxed out, could  you still make the mortgage payment and the required minimum payment on each maxed card.  She saud it was not an issue but still a good idea to shut them down if we did not need them.

I have one credit card that I believe has a $30,000 limit. There’s no way that I could max that out and pay the mortgage, regardless of whether or not I or my wife kept or lost our jobs. So I tend to see credit scores as a response that you HAVEN’T maxed out your limits, not that how you’d handle it if you did?

  • Heart 1
Link to comment
Share on other sites

7 hours ago, Dirtyhip said:

Like, maybe you have a few credit cards, but owe next to nothing on them.  Credit cards love to give you this HUGE amount whenever you apply.

I assume a bank would look at the person and their ability to pay the loan, and credit history to see what kind of people he or she is.

I also assume that banks know that people hold multiple credit cards and use them for points at different places.

Adulting is complex.  Lots of assuming in this thread.  HAHA

 

 

The last loan I got was a special, very-low-rate at the time, 4-year refinanced mortgage from Wells Fargo in 2003 and I didn't have much in available credit but I had an 800+ credit rating, a couple decades at least of never missing a mortgage or car payment, and was a tenured public school teacher with a good income.  I would expect those things are still much more important than available credit even though that affects your credit rating in terms of % of total available credit you owe.

When I went to China in 2001 for 2 weeks on a great deal for $2400+, I remember calling the credit card company to add to my total available credit so I could charge it.

I have always kept low total available credit on each of my credit cards to avoid potential stolen or I-can't-prove-it stuff, though as cash-back became a big gimmick, I now have 7 cards to maximize it and avg. about 3% cash-back.  Still, I only have about $35K in available credit.  I automatically pay my cards off each month: I surely don't need more.

 

 

Link to comment
Share on other sites

18 minutes ago, MickinMD said:

The last loan I got was a special, very-low-rate at the time, 4-year refinanced mortgage from Wells Fargo in 2003 and I didn't have much in available credit but I had an 800+ credit rating, a couple decades at least of never missing a mortgage or car payment, and was a tenured public school teacher with a good income.  I would expect those things are still much more important than available credit even though that affects your credit rating in terms of % of total available credit you owe.

When I went to China in 2001 for 2 weeks on a great deal for $2400+, I remember calling the credit card company to add to my total available credit so I could charge it.

I have always kept low total available credit on each of my credit cards to avoid potential stolen or I-can't-prove-it stuff, though as cash-back became a big gimmick, I now have 7 cards to maximize it and avg. about 3% cash-back.  Still, I only have about $35K in available credit.  I automatically pay my cards off each month: I surely don't need more.

 

 

My husband and I have never made a late payment, on anything.

Well, maybe my husband did before I was in the picture, not 100% sure on that.  But, for the last 27 years, he have never made a late payment.

We had some financial problems in 2008 and 2001.  Our emergency fund was a lifesaver.   I have always been a saver and having an emergency fund has been a priority since my twenties.   My family taught me this. There were times I only saved $25.  I was consistent over the years.  Bought my own home as a single gal before I was 25.  

  • Awesome 1
Link to comment
Share on other sites

11 hours ago, Old No. 7 said:

My point is that 14 credit inquiries in one  day is a lot. That WILL effect your credit score. Sorry you don’t like it but I am confident that you suffered no loss from that other than a truck load of butt hurt that you carry to this day. 

It will be a lot longer than to this day.  I push for stronger legislation to control the actions of these companies at any chance I get.

Link to comment
Share on other sites

I should not have worried.  The credit union lady said that while they do look at the unused credit availability, it won't matter at all in my case.  She said our score is an A+  Loan to value looks fantastic, and debt to income is basically nothing right now.

She laughed cause she said, while it could be possible that someone might max out all their cards, they look at credit score and what the current obligations are.  They look at my history and how I use that credit that has been given to me.

Note;  I will be closing at least one card after this.  I don't use that card and there is no reason to have some high limit out there that could be compromised.

Link to comment
Share on other sites

17 minutes ago, Dirtyhip said:

I should not have worried.  The credit union lady said that while they do look at the unused credit availability, it won't matter at all in my case.  She said our score is an A+  Loan to value looks fantastic, and debt to income is basically nothing right now.

She laughed cause she said, while it could be possible that someone might max out all their cards, they look at credit score and what the current obligations are.  They look at my history and how I use that credit that has been given to me.

Note;  I will be closing at least one card after this.  I don't use that card and there is no reason to have some high limit out there that could be compromised.

Yay! 
So, want to go to Hawaii after you get that loan? Your treat since you got all this credit burning a hole in your pocket.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...