We recently pulled credit for a highly responsible borrower who makes great money, has no debt and pays cash for everything. The issue? He closed out all of his credit accounts, and cannot qualify for mortgage financing.
Lenders require at least two to three “open” trade-lines or accounts on a credit report. Trade-lines include credit cards and open installment loans (like a car loan).
In addition, a borrower’s credit score will be higher IF he has numerous open accounts with high limits and low balances. Borrowers are almost always better off with open accounts as long as the balances are low or zero.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646