Travel Hacker in Training

Discussion in 'Newbies' started by KentyMac, Feb 25, 2013.  |  Print Topic

  1. KentyMac

    KentyMac Active Member

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    Hello everyone!

    First off, thank you for the very helpful community I've found here. :) Over the past week & a half, I've been devouring information on travel hacking from various sites and been absolutely fascinated by the possibilities! My wife & I love to travel, and would especially love to travel for free/cheap. ;) However, before I jump into the pool I have a few questions and concerns I'm hoping someone can help me with.

    1. I just checked my credit score (Credit Karma) and it was 793, so no problem there. I've about $70,000 in current available credit but am using less than 1%. From what I've read, I can definitely take some hits score-wise and apply for a few cards.

    2. However, I do anticipate purchasing a home some time in the next two years. I've seen several experts suggest NOT doing this if you are planning a major purchase within two years. While that makes sense and I wouldn't want to go crazy and start churning cards every few months, would it be relatively safe to get a few new cards?

    3. If I did apply for a few cards, would it be advisable to lower the limits on the lesser used cards so my available credit doesn't go sky high? I think that's one of the primary concerns with attempting to get a home loan.

    4. If that's a completely horrible idea, what about opening a few in my wife's name?

    Thank you for helping out a newbie! :cool:
     
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  2. sharris503

    sharris503 Silver Member

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    If you were to get a few cards, I doubt it would have much impact on your ability to get the best rate for a mortgage. I recently got a car loan and all my credit inquires did not prevent me from getting the best rate for that loan. Of course, every situation is different so use due diligence.

    Having a high level of available credit does not hurt your credit score, in fact, if anything it probably helps. What hurts your credit score if a lot of that available credit is being used. Credit utilization, the ratio between available credit and outstanding balance, is a big part of your credit score, more so than credit inquiries. Ideally it is 0% because you are paying off all your balances in full. I would not lower the limit on your other cards unless you were transferring the available credit to a new card in order to get approved for the new card.
     
  3. KentyMac

    KentyMac Active Member

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    Thank you for the reply! My concern with the available credit was not hurting my credit score, but impacting how much I could borrow towards a house. If I already have hundreds of thousands of available credit in cards, my understanding is banks don't want to loan you much for a home.

    Anyone else have any thoughts on cards if I want to get a home/investment property in the next two years?

    Thanks!
     
  4. wrxmom

    wrxmom Gold Member

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    2. I'd hold off and wait until you have your mortgage. It's one thing to apply for a car loan for 30k or less and another thing to apply for 100k+ mortgage. Why take a chance of having to pay a higher interest rate and/or points?

    3. Don't reduce your limits unless you're put in a situation where the issuing bank won't give you new credit. Your credit limit/s is/are your leverage.

    4. Only if she agrees. And if you're both going to be on the mortgage then wait.
     
  5. particlemn

    particlemn Silver Member

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    If you are looking to purchase a home in the next two years? are you goign to wait the full two years or start looking in the next 3 months, this will determine how to proceed, also will you be putting 20% down on the property if so and you will be at least 1 year away from purchase a few cards will probably not hurt you, if you will be putting down less than 20% the banks may look at credit inquires a little closer and you may have a slightly higher interst rate.
     
  6. emtesenair

    emtesenair Silver Member

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    2. I just purchased a home in May and have some recent experience. When we met with the bank regarding a mortgage, we were requested to close any new credit cards that were under 1 year old. We hadn't started churning cards at that point and ended up only closing a store card we had opened. I wouldn't recommend opening new accounts until after you have closed on your new home to avoid unnecessary work on your end and to ensure you will qualify for the best rates.

    4. We asked this question when we talked to our mortgage broker and if your wife is not going to be on the mortgage then yes!
     
  7. brettmna

    brettmna New Member

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    I currently work in the mortgage industry and when we look at credit reports it only shows the last 160 days in regards to inquiries. That will vary by lender of course. The only time I've been asked to dig into inquiries is when the DTI was on the high side, so I would suggest paying down debt if you have any. Just my two cents...
     
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  8. jpersonette11

    jpersonette11 Active Member

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    I agree with everyone above.

    I would also recommend (assuming the home purchase is a priority) that you actually for your real FICO scores.
    Credit Karma is a guide, and I can't tell you how many times that it is either much higher, or in some cases, much lower than your real scores. I also agree that if if you are planning to do anything within the next 12 months or so...i wouldn't even risk it. That again, is assuming that the Home purchase far outweighs some award travel miles.

    If you knew which bank you were going to use, and the actually situation today...then you could proceed with different actions. But If two years turns to 14 months or ends up being 5 years....I would say for now...I would wait 12 months and re-visit this.

    But then again...everything could change.
     
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  9. br3nt

    br3nt New Member

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    Awesome information! Very helpful. I'm a newbie as well, so a lot of this is brand new to me.
     
  10. TravelBear

    TravelBear Gold Member

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    A little late to the party, but, if I were you I would likely get no more than a couple of cards(each) that you can learn the ropes with and whose points will give you the greatest flexibility. Slowly lean into manufacturing spending if that is something you are considering. Get comfortable to the point that you feel confident with what you are doing. Maybe around that time the house buying will come into play. Get the house thing done, then ramp up your mileage/points earning.

    My opinion. Enjoy the ride!
     
  11. marcwint55

    marcwint55 Gold Member

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    I would not be concerned. I own several homes and have been approved for several mortgages after getting new credit cards. The only issue would be if you get several new cards and they all have high balances owed.

    If you want to travel more, you and the wife should each get new cards with bonuses, as that will get you on the road much quicker.

    Welcome to Milepoint and best of luck.
     

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