I'm Listening to Dave Ramsey's Dumping Debt video on Youtube and he said that if you go to buy a home and have credit cards with 0 balances on them it will actually count against you since you're an accident waiting to happen. He said that the trend is that most people who buy a new house want to go spend money to furnish it, etc.

DH & I plan on moving in about a year (maybe sooner, maybe later). At that point we should have NO credit card debt, NO car debt, and HOPEFULLY at least $10,000 in savings! We're following Dave's plan but because we want to buy a house soon we don't want to ruin our credit scores by closing down all our credit cards. We'll gladly do it after we get into our new house, but we do want good credit scores when geting the home loan. At that point though, we will have probably OVER $80,000 in available credit. (we have a few cards with BIG credit limits)

So, should we close down these accounts now? Will our credit score go down a bit and then pop back up? Do we keep one card open? Should we close down our Best Buy & Lowe's accounts (haven't used them in years anyway) or are they better than regular credit card accounts? If we close down too much too soon, will our credit score drop? We have a while till we move, but will it then come back up??

I know VERY LITTLE about credit scores - ours are pretty good and I don't want to screw anything up.

THANKS!!!

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Stay at home mom to my 3 boys... ages 5, 3 & 1!

I can do all things through CHRIST who strengthens me. Philippians 4:13

Hi there! In my life before DS, I worked as a mortgage processor at a credit union and was training to take over the UW duties of my loans when I decided to leave to have our son. I am also a HUGE Dave Ramsey fan. With that...
I know it goes against his teaching but don't close out your zero balance cards before you buy your house, your credit score will go down especially with those cards that have been with you for years. Most mortgage co's use automated underwriting software these days that takes a combined look at your credit score, debt to income ratio, housing to income ratio and down payment to make a decision about your rate. It is in your best interest to have the highest credit score possible combined with buying a home you can afford with a substanial down payment (20% is key to avoid PMI). The higher your down payment, the less likely you are to just walk away from the house should you have a financial problem. Another biggie - don't use those credit cards at all during the process of buying your house because credit reports are often pulled at the beginning of the loan process and right before closing to make sure that you haven't taken on a big batch of new debt. I was always amazed by people who would go out the week before closing on their home and buy a new car, and then get upset at me when I would let them know that the terms of their approval had changed.
As soon as your home purchase is closed and you have signed all the mortgage paperwork start closing those credit cards so the temptation is gone.
Good luck with finding your new home - it is exciting and stressful so find a great realtor and a great mortgage lender who will walk you through this with patience and understanding. AND remember that you do not want an ARM (adjustable rate mortgage) that is what is getting everyone in trouble these days.
PM me if you have any other questions.