Oct
28

Closing an Account May Be the Boost Your Credit Needs to Buy a Chicagoland Home

October 28, 2010

chicago real estateIf you’re wondering whether closing one or more credit accounts will help you qualify for a mortgage on your dream Chicagoland home, you’re not alone. In fact, the experts at the

Equifax Personal Finance Blog say the credit scoring process is so dependent on specific details unique to each consumer’s history that there’s no way to give a simple answer to the question.

Experts say the impact created by closing an account will depend on various factors. In the recent article, “

Credit Score Changes: How Does Closing an Account Affect My Credit Score?” they say it’s important to keep a “healthy mix” of accounts open. If you have several accounts of the same type, credit cards for example, closing one or two accounts within that group probably will not have much impact.

However, if you choose to close the credit card account you’ve held the longest, you’ll take away a resource that demonstrates a longer history of paying your debts. If you decide to close one or two accounts, choose the ones you’ve opened most recently.

Before you take any action, both you and your cosigner should check your credit reports if you haven’t done so recently. You’ll want to make sure the information is accurate and take steps to correct it if not.

If your choice is to use the cash you’ve saved toward your new Chicaoland home to pay off credit card debt, you’ll probably be wise to find a mortgage lender first and work out your best course of action with her. In some cases, the cash may be required for the downpayment amount or closing costs. In others, the underwriters may look more favorably at having emergency cash reserves while you maintain a healthy mix of credit accounts.

If you prefer to remain anonymous a little while longer, check out the FICO Score Simulator link at the

Equifax Personal Finance Blog.  If you set up an account with Equifax, you can use the simulator to see its recommendation for your best course of action or to see the impact of a credit action you are considering. The blog also  contains numerous articles on credit reports and how the reporting process works. Taking the time to learn could help you make the most beneficial steps and have you living in your new Chicagoland home even before you expected.

About The Author

Read All Stories By Carol Morgan

Carol Flammer is a public relations and social media marketing expert, strategist and consultant. With 20 years of experience, Carol has established herself as the “go to” for real estate and construction products public relations and social media. Carol is president of Flammer Relations, Inc., and managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Atlanta and Chicago.

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