Refinancing ups and downs

posted by Jeff | Saturday, May 27, 2006, 6:01 PM | comments: 4

After shopping around, I've found that the best loan deal I can get to refinance the house puts me at the same interest rate, with closing costs of $2,400. I hate how they fuck you with those closing costs. I think we paid $3,000 for the original loan, but that's still too much. My payment will be just a few dollars higher, which isn't horrible I guess.

On the positive side, my credit score is astronomically high. From what I've read, anything over 720 is gravy, and mine is 760. It's calculated in part by how much available credit you have, which seems counterintuitive to me since you could finance yourself to death in one day with all of that open credit, but I guess the banks think otherwise. I'm surprised my score was so high because I carry a lot of debt, but as a percentage of what's available (last check I've got like $50k at my disposal), it's small.

This makes me wonder what would have happened if I didn't get several accounts early on in college and allow them to keep raising my limits. If you don't open those accounts, you're going to be screwed in adulthood when you want to buy a car or a house. For the bad rap that credit cards get, they're obviously a critical tool in building credit. You learn something every day.


Comments

CPLady

May 27, 2006, 11:46 PM #

Funny...when we went to get our equity loan (to pay off about $30K in debt), I was the one with the lower credit score because I had too MUCH available credit in my name. Our biggest debt was the mastercard which is in both our names.

They said the lower credit score was because I had so many credit cards (mostly store cards) all with zero balances and high limits.

Jeff

May 28, 2006, 1:09 AM #

I think that it's relative to your overall income, but the credit agencies wouldn't know that. That's odd, because that's the opposite of everything I've read. I think your bank might be wrong.

Gonch

May 28, 2006, 4:45 AM #

My experience mirrors Jeff's. The more unused available credit you have, the more they're willing to give. The more of the available credit you use, the lower your FICO score.

The ultimate though was finding out that my credit score would be higher if I used less available credit, but missed payments as opposed to using much of the available credit and never missing a payment in my life.

Go figure. It all seems exactly backwards to me.

CPLady

May 28, 2006, 2:06 PM #

That's the weird thing. We never miss payments. But regardless, I've cancelled several store credit cards.


Post your comment: