MissExcellentCredit wrote:Hey all.
Does anyone know if debt on a credit union credit card is viewed more favorably than just a regular bank credit card? Or is my thinking right that debt is just debt, no matter where it comes from?
Mortgage debt, student loan debt, and installment debt is generally looked at more favorably than Credit Card debt. Generally the terms are favorable.
Credit cards are supposed to be used for short term financing. When the balances are high it makes it seem as though you arne't making enough money to keep yourself afloat, especially if balances increase from month to month.
Debt is viewed differently depending on the credit limit of the card. A $300 debt on a credit card with a $22,000 limit would actually be viewed as a positive thing, meaning that you have a large percentage of available credit. A $300 debt on a credit card with a $250 limit would be a definate negative, because you are showing behavior of someone who doesn't know how to live within their "limit"
Small balances totalling $500 spread over many different cards would cause a lower credit score than the same amount of debt compliled onto a card with a $5500 credit limit.
When it comes to installment debt, or credit card debt, the lender who holds the debt may also come into play, as another poster suggested. A payday loan or personal finance loan would be viewed much more negatively than a student loan. Lenders generally expect people to budget and save for large expenses, rather than taking a payday loan or personal loan to finance them. A personal loan can also indicate the lack of adequate savings to address short term emergency spending needs (think Air conditioning repair in the middle of summer)
The banks look at NOT the total amount of debt, but rather the ratios of certain types of debt in relation to what open credit lines you have available to use.
Hope that was as clear as mud!
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webhopper wrote:
MissExcellentCredit wrote:Hey all.
Does anyone know if debt on a credit union credit card is viewed more favorably than just a regular bank credit card? Or is my thinking right that debt is just debt, no matter where it comes from?
Mortgage debt, student loan debt, and installment debt is generally looked at more favorably than Credit Card debt. Generally the terms are favorable.
Credit cards are supposed to be used for short term financing. When the balances are high it makes it seem as though you arne't making enough money to keep yourself afloat, especially if balances increase from month to month.
Debt is viewed differently depending on the credit limit of the card. A $300 debt on a credit card with a $22,000 limit would actually be viewed as a positive thing, meaning that you have a large percentage of available credit. A $300 debt on a credit card with a $250 limit would be a definate negative, because you are showing behavior of someone who doesn't know how to live within their "limit"
Small balances totalling $500 spread over many different cards would cause a lower credit score than the same amount of debt compliled onto a card with a $5500 credit limit.
When it comes to installment debt, or credit card debt, the lender who holds the debt may also come into play, as another poster suggested. A payday loan or personal finance loan would be viewed much more negatively than a student loan. Lenders generally expect people to budget and save for large expenses, rather than taking a payday loan or personal loan to finance them. A personal loan can also indicate the lack of adequate savings to address short term emergency spending needs (think Air conditioning repair in the middle of summer)
The banks look at NOT the total amount of debt, but rather the ratios of certain types of debt in relation to what open credit lines you have available to use.
Hope that was as clear as mud!
You really dug in there hopper!
Jutz wrote:You really dug in there hopper!
I am a personal finance nerd... If I didn't already have a career I would enjoy personal finance career pursuits.... 
oh well, not quite ready to quit my day job ROFL
Starting Score: 08/29/2011 TU 671 EQ 674Current Score (myFico + Amex): April 2013 TU 754 EQ 694 EX 694
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
Silver Spade Garden Club Member: App Free since 1/1/13. No more apps til 2014
MyFICO Fitness Goal: 800s Club!
Take the myFICO Fitness Challenge
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