Is it Possible to Buy a House with a Credit Card Debt?

Credit cards and how they are used will hugely influence your credit history and impact several other financial decisions that you will make later on in life. If you are responsibly using a few cards well, then you are showing that you are able to handle your credit well and as a result, you will be able to earn higher credit ratings. If you are using your credit cards excessively or irresponsibly, then the rating agencies and financial institutions will conclude that you have a problem handling money well and your scores will go down as a result. Yet many people end up piling up on the credit card debt. While the credit card debt may not necessarily prevent you from owning a home, how that debt is managed may, on the other hand, prevent it.

credit card debt

So it is not a question of whether you have it or not but how well you manage it when you have it. At the end of the day, these institutions are looking at the sense of responsibility of the debtor. Because this is a market economy, there are bad credit mortgages or bad credit lenders that specialize in lending people who have piled up on credit card debt although these might come at a higher rate. Your credit card score will go a long way in determining the interest rate that you are likely to pay. People with poor credit rating are likely to incur higher rates for their mortgages than those who don’t.

How Did Your Credit Get So Bad?

There are lots of things that will influence the credit score. These include the following:

  • The number of credit accounts that you have
  • Duration over which your credit accounts have been operational
  • Payment history on your credit accounts
  • Credit accounts balance vis-à-vis the credit limits

What the credit rating agencies generally want to see is a record of accomplishments in meeting your debt obligations. Some of the things that they look at in order to calculate your credit score include promptness of payments on all the credit accounts. Lenders prefer people who have fewer credit accounts so that there is less risk of people overextending themselves with debt.

The Significance of Credit Card Debt

When it comes to credit card debt, having a balance that is much larger than your credit limit is generally not a good sign that you are a responsible spender. It shows you are spending more than you are willing to pay and that sends the red signals to the lenders. If this is a recurring problem with your credit card debt, then it can be a terrible sign and that means you will be shunned with many of the mainstream lenders. This is always looked in terms of the percentage over your available balance. The lenders do not look at your debt in dollar terms but as a percentage of a defined limit when calculating your credit score and determining your creditworthiness. People with higher percentages will have a big problem getting mortgages on good terms from the many lenders. Fortunately, such people can also use the bad credit lender services which can come with favorable terms. Visit them online at http://www.debthelpline.com.au/.

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