First credit card at age 48

First credit card at age 48

First credit card at age 48

First credit card at age 48. Recently a client reached out to me with news that his mortgage application was denied. He went on to tell me that he has good savings and a high paying job. My client was besides himself asking how it was possible. Someone with his credentials would be denied a mortgage given he could comfortably afford the payments. I had a simple question for this client. How is your credit? Before his response I already knew part of the answer. His response was it must be perfect because I never had a credit card before.

No credit does not equal good credit

To the uninformed they assume; no credit will equal good credit. However, this is fundamentally wrong. Creditors need to see how you manage your credit over a reasonable amount of time. Credit scores are directly connected to the length of our credit history. 

Age of credit history

Old credit is usually good credit. New credit is like a teenage driver. Higher risk, higher probability for an ugly accident. Keep older accounts in good standing open and avoid opening new lines of credit unless absolutely necessary. The only time opening lines of credit is when you have zero lines of credit or not enough lines of credit. As your credit matures having multiple lines is ok. I open and close new accounts. I keep older lines open and I’m never going to close some of those older lines. 

Total accounts

Age of credit history and total accounts tells a story of success with credit. Where too few accounts don’t allow for a big enough canvas too many accounts show a dependence on debt and a potential for default if the user is over leveraged. Again finding the right balance is extremely important. Mortgage lenders want to see at least 3 lines of credit. 

First credit card at age 48

So what options did my client have? His only option was to start building credit and obtain his first credit card at age 48. We actually ended up recommending at least 3 lines of credit for 12 months before submitting a new mortgage application. My client was able to obtain a mortgage this time and move into his dream home. It was a hard lesson to learn but easily resolved. Ignore anyone which says you will never need credit and that credit is bad. That is false. Credit can build wealth if leveraged properly. 

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First credit card at age 48

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