10-04-2012 10:16 PM
Hi, my wife and I are currently in the process of getting ready to do some upgrades to our home.
We are already floating some of the purchases on interest free Home Depot and Lowe's CC's as well as put alot of items on a CC with a promotional 0% APR.
We have the the majority of the money needed for the project (including the items that are being deferred), but are looking to keep cash free for contractors and materials, as to not run ourselves to thin. I understand that many people would say this is risky to some extent, which I agree that for many people it could be, but we have done this before for 2 other rehab projects we did, and it worked out great.
My question is we would like to refi our house once we are done with the renovation, which I am hoping is 3-4 months from now.
I am wondering how much carrying the debt , temporarily will reduce our credit scores, which are both in the high 700's currently.
Most of the debt is currently in my name, as my wife is finalizing another refi on our previous house, which is now rented and we wanted to keep her CC balances zeroed.
I assume that we will have to pay off all the debt prior to refinancing the house, but I am wondering what if any long term impact it could have once we pay it off, so that I can prepare to mimize any affects that would affect our interest rate on the refi.
Should we keep it all in my name during the process so that it does not affect her score at all prior to the refi?
Any input advice is appreciated.
10-05-2012 01:57 PM
Credit card utilization is reported as a "moment in time" item. So say you had a $10,000 limit on your lowe's card, and in 4 months it was paid down to $100, and you wanted to re-fi your house, when lender pulled your credit, all that would show up is the $100 balance. They have no way of knowing that you at one point maxed out your credit cards. They will be able to see the "High Balance" on your reports,(which is the highest balance that has been on a statement) but that isn't really that important, They don't know whether you floated that balance for months or paid it off the day after your statement cut. . Just make sure you don't miss any payments.