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Will maxed out credit cards (3) be held against me if I refinance to pay them off?

  • August 28 2013 - Upper Providence Township
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Answers (7)

Yes, they are held against you in the way that your credit score will be lower with high usage of your revolving trade lines. Automated underwriting systems that are used on 90% of loans for approval view high ratios on your credit allowance utilized as a risk factor which could possibly cause a denial of the application. Also, most loan programs do take into consideration for your debt to income ratio the min payments to those tradelines for qualification even though they will be paid off thus creating a higher DTI than you will have after the closing.

All The Best!

  • August 28 2013
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This depends on the credit limits and balances. For example, a maxed out credit card at 10,000 is a stronger hit to your credit score than a $500 credit line that is maxed.

The credit score is partially determined by credit usage, so if you have 3 other accounts that have zero balances, this may not be as bad.

The credit score will determine your interest rate, and paying off credit cards is a cash out refinance, which can also have an impact your interest rate.

Paying them off is very good in the LONG RUN for your credit score if you do not continue to use them often.
  • August 28 2013
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By paying off these cards through the cash received in your refinance you should actually see a boost in your credit score in the months that follow. Just do your best to keep the balances on those cards below 50% of the credit terms moving forward and you should be just fine.

Good luck with your refi and great work on taking the next step towards a better financial future!
  • August 28 2013
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Maxing out a credit card can certainly affect your credit score. Along with that, I'm sure you already know that your credit score can affect the financial options for loans and refinances. I suggest that you be careful and make sure all of your debts and payments are paid on time.

Well I hope this helps! If you have any further question or if you would like a loan, feel free to contact me. Also, if you found this comment helpful, please leave me a review!

Good Luck!
  • August 28 2013
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Not at all, but they are a factor of your credit score. Maxed out Credit Cards have an adverse effect on your credit score. If your score is good enough to qualify and you have enough equity in your home to pay them off, you are good to go! Feel free to give me a call or email and I can figure this out for you in just a few minutes. We can pull your credit report, research your homes value, and provide a free proposal. Thank you
  • August 28 2013
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Credit score is key-keep them UNDER balance and pay on time and hope your score is good enough to qualify for a cash out refi :)
  • August 28 2013
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No but your credit scores will hold it against you. Have you seen your scores lately?
  • August 28 2013
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