I was eating dinner with my old boss and other business associates I work with on RebuildingRotaryEngines.com, when it came time to pay the bill I pulled out my wallet. They said you sure got a lot of credit cards, they didn’t see half of them.
I asked them if they had credit cards, they did, most of them had one personal credit cards. Their reasoning was I already got one credit card, if I need it I’ll use it. I would 100% agree with that, there is no reason to have lots of credit cards, unless of course you want to be a stronger borrower when you purchase a piece of real estate.
When you go to apply for a real estate loan they’ll of course run your credit. If you have a high score thats credit, but then the next question is how stable is your credit. Bankers would ideally like to see three (3) lines of credit.
A line of credit is for example one of the following:
- a car loan
- a student loan
- a credit card
- a business loan
- a house mortgage
A line of credit is basically any type of money you are borrowing and paying back. Make sense?
So what they would like to see is three (3) lines of credit with at least a one (1) year history ideally.
Keep in mind, if you have a student loan and are not currently making payments on your loan, it is probably not affecting your credit score for the positive. They are looking for three lines of credit with history showing that you are able to make your credit payments, so they know you will be able to make payments on your house mortgage. Make sense?
So if you want to be a stronger borrower, keep in mind you can still get a mortgage without three lines of credit, but ideally three lines of credit with a one year history on each of them is going to probably help out the process, and potentially get you a lower rate.
Have one credit card, or one line of credit, you may consider getting another one if you are serious about purchasing a piece of real estate and going to be getting a loan.
I did not know this when I got my mortgage, had I do it all over again I would get three lines of credit immediately when I was 18, not just one. I got a credit card immediately when I turned 18, that helped a TON, I had 2 years of history on that line of credit. But what I did not know, is they want to see a good credit history on three lines of credit.
So remember, we want three (3) lines of credit with at least a one year history ideally.
Of course, history with LOW or NO balances on the credit cards, and PAYMENTS ONTIME in full or more than the min balance. Three credit cards with late payments for one year will hurt you, obviously, so be smart, three is what you want with good history on each other them ideally.