Just
as a lot of inquiries suggest you may be overextending yourself,
a lot of available credit means you have the capability to overextend
yourself in the future, even if you have not done so in the past.
Although people
may think having several credit cards with high limits is a sign
that they have good credit, too much of this good thing can make
them seem like a poorer credit risk.
Lenders will also
look at the
following
in determining the type of loan you will receive (if
any). They are looking for signs of stability and responsibility:
- your
monthly income
- length
of employment (two or more years is ideal)
- occupation
- whether
you own or rent your home (again, two or more years is prime)
- how
often you've moved
The lender
needs to be reasonably sure that you will continue to be able to
repay your debt in the future. But if you have thousands of dollars
of unused credit available, you might spend it all the month after
your loan goes through and suddenly have more debt than you can
pay off.
To prevent
this, close unused credit accounts before applying for a home loan,
and/or consider having your credit limits reduced. If you do either
of these things, make sure to ask the creditors to record that the
account was closed or changed at the consumer's request -- you don't
want anyone to get the impression the bank closed the account because
of problems with your payment habits.