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Objectives:

  • Continue to purchase 1-2 rental properties a year
  • Keep enough revolving credit for large emergency's
  • Continue to pay off credit balance each month in order to avoid interest charges.
  • Have highest cash back my bank offers.

Current factors:

  • Expenses to income monthly is 45%
  • Debt to income annually is ~32%
  • Credit card debt is cleared monthly
  • All three credit scores above 750

Situation:

I noticed my bank offered a cash back card that would get me .5% more if I got it. When I applied the bank offered me another $20k in revolving credit at an apr of 12.9% (which I requested they review to get down to 11.9%). If accepted my total available credit between my two cards at this bank would be $30k. Now I only have one credit card currently and the balance never exceeds what I can't cover in a single month. Usually 20%. My question is two fold.

  1. Will it hurt my credit if I accept this new card?
  2. Will it hurt my ability to continue getting home loans if I accept this new card?

We are assuming that my spending will remain a constant so my credit utilization would drop to 5% I think.

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It will help your credit score to get the card. 30% of your credit score is calculated based on credit utilization. you want to make sure you are only using about 25% of your available credit. You will get dinged a bit for a age of credit history and credit inquiry count.

So for both of your questions the answer would be no.

  • The common number is 1-19% for ideal utilization. He already applied (credit inquiry ding), but you are correct, accepting the card hits his history age average. – JoeTaxpayer Apr 11 '15 at 14:09
  • Okay, this is what my gut was telling me but I'm not super versed with it so I wanted to ask. Thank you both for the input – Anthony Russell Apr 11 '15 at 16:00

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