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Can you open new credit lines based on your mortgage?

By
Real Estate Broker/Owner with Dream Town Realty

Did you know that your mortgage is currently working in your favor when it comes to applying for credit? The likelihood of gaining new credit may be enhanced simply by carrying a mortgage, despite the state it’s in. 

In a recent article published by Janet Dedrick of the Equinox Finance Blog, she states that people with mortgages are seen as lower statistical risks to credit card companies. Consider the following: 42% of new credit cards have been issued to people with mortgages and 60% of new credit has been issued to those with mortgages. Half of these people have a mortgage at or below $200k and 35% have mortgages between $100k and $200k.

What if the current state of the mortgage on you Chicago homes is less than ideal? According to Dedrick this doesn’t necessarily rule you out in the credit world. She says that 35% of those surveyed for this study are currently underwater on their mortgages and 30% of new credit holders with a credit score above 700 are also underwater. According to those stats, credit lenders are willing to take mitigating circumstances into consideration when releasing new credit.

The value of your Chicago home and equity accrued are key components to obtaining new credit lines. Those with equity in their homes are better equipped to weather financial hardships (i.e. loss of job, medical emergency, payment of a child’s college tuition bill, or otherwise). As the economy does its best to stabilize, consumers have begun spending again and credit card companies are offering more cards and services to accommodate American spending habits.

Some things are simply out of consumers’ control, but having a mortgage that’s underwater doesn’t automatically make you a lesser candidate to obtain new credit.

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