Credit Cards Help You Get a Mortgage

Do credit cards help you get a mortgage ? Most financial folks say having credit cards (which you pay off) are good to help build your credit score and thus help you get a mortgage. This is true, but far too often this idea is used as a sales pitch for credit cards.

Does  the Credit Limit on every credit card you have counts against you for your mortgage?

The person we dealt with at our bank did a credit check on us, when we applied for our mortgage and gave us a report that looked like this.

do credit cards help you get a mortgage

Shackled to Credit

  • Credit Card 1 Balance $0  Credit Limit $1000
  • Store Credit Card 1 Balance $0  Credit Limit $2000
  • Credit Card 2 Balance $0  Credit Limit $2500
  • Store Credit Account 1  Balance $500  Credit Limit $5000  (we were buying a couch on a zero % interest deal)

We were then informed we had been OK’d for a mortgage balance of $X , taking into consideration my income, and our down payment. We were then informed that the real balance they would allow us to borrow would be lower.

$X - ( $1000 + $2000 + $2500 + $5000 )

The explanation given was the calculation done needed to include the potential debt load I might add with those extra debt vehicles. This made sense to me, and we got our Mortgage.

There are reports that this potential debt load is no longer being considered by some vendors? How could any sane lender not take this into consideration?

Question for Readers

Did your lender ask about credit cards, also did the credit cards count against your mortgage loan level ? I have had differing answers from different folks.


Auto Loading Your Loyalty Card is a Bad Idea

I ran into a very bad issue with my Starbucks loyalty card a while back, when all the information in the Starbucks database was hacked and my account information was stolen. This information hack allowed the thieves to create their own version of my Starbucks card, and they “went to town” on it.

Let me digress , remember that the Starbucks loyalty card is not a credit card per se, it is a card which is “filled” from a money source so that you can buy things (note I said things not just coffee) at Starbucks (and collect allegiance points and such). You can “fill” the card from a bank account, a credit card or even your Pay Pal account, and you can fill it one time or you can set up the “Auto Load” mechanism. The auto-load mechanism will take money automatically when your loyalty account balance drops to zero (or a preset threshold), and this is where the hackers found their angle.

The scam seems to run like this, once your account or loyalty card is “cloned” someone goes into a Starbucks store, and buys $100 worth of things (most times just a gift card), and then the auto-load kicks in, takes money from its source (Credit Card, Bank Account, etc.,) and then the thief go to another store and will buy another loyalty card, and this continues on until the account is flagged or in my case, I saw what was going on and called to cancel the auto-load. The only reason I knew this was happening was because I got notifications on my phone telling me that the auto-loads happening.

Loyalty Card Scam

A Graphic Rendition of the Scam

In my case I was lucky enough to catch it early, and Starbucks was smart enough to refund me all the money taken (after 15 business days).

Since this incident I have gone to any other loyalty cards that I have like this and turned off the auto-load option, to stop this scam from happening again (some examples might be a Tim Horton’s card or maybe your Subway Card?).

This is not a commentary on the Starbucks Brand or Coffee (I still drink it and enjoy it), but a reminder of the fact that the easier it is for you to spend money, the easier it is for the scammers to find a way in to get at your money (and spend easily as well).


Cash Advances and Lottery Tickets

Today I learned an interesting paradox that arises when you buy lottery tickets with a credit card. Luckily, I was not the lottery ticket purchaser, I saw this on a local TV news program, where a gentleman was very upset to find out that this was actually the case (i.e. if you buy lottery tickets, or services from the OLG, the Credit Card company treats it as a cash advance).

I thought this was a great idea as a deterrent to buying lottery tickets (or using the new OLG Gambling on-line program), but the credit card companies logic is also very sound. Think of it, I buy lottery tickets with money that I borrowed, but will promise to pay it back? No, the Credit Card Company wants you to have the cash right away, and the only way to do that is via a cash advance.

Lottery Losses

Your Odds on the Lottery
Image courtesy of Stuart Miles at

To quote the OLG web site directly:

It’s important to note that your credit card issuer may apply a cash advance fee when using credit cards on PlayOLG. To be sure, check with your credit card issuer. 

Please note:  Not all credit card institutions accept online gambling transactions.  If yours is rejected, please try a card issued by a major Canadian bank or INTERAC Online.

Evidently folks are not reading the suggestion to check with their Credit Card Companies as there are plenty of stories complaining about extra charges, and unnoticed cash advances.

Frankly, I am thinking good on the Credit Card Companies (for once), but that is very mean-spirited of me.

One more helpful thing from the OLG site on their “Where does all the money go” page:

2% of forecasted OLG slot revenue to problem gambling funding



The Cost of a Credit Card Transaction

The large credit card “companies” in Canada have agreed to freeze their “transfer fee” to 1.5% of the sales value, which is a good thing for retailers, but I am not sure if it is a good or bad thing for consumers. The transfer fee is the skim the credit card takes every time you use it to purchase a service or product, and it is paid by the retailer.

Credit Card

Frozen Fees for Now.
Image courtesy of Michelle Meiklejohn at

This skim can be as much as 3.0% of a sale that a retailer pays (for cards like Amex and other “premium” cards), so this fee freeze will help retailers limit their expenses for allowing us the convenience of using Credit Cards for purchases at their store (or services from their firm).

The Canadian Federation of Independent Businesses says the skim adds up to between $5 and $7 Billion a year in costs for them. Who pays that? The business has to incur the cost, but they simply pass on the cost with higher prices for services and products, and this is all so that we can make payments simply.

The other interesting question is how are the Credit Card providers (i.e. the banks) going to recuperate the income they will lose with this freeze? The banks will be the ones “subsidizing” this freeze, but they will (no doubt) find a way to either deal with the lost income, or find new income streams to extract the money from consumers (and businesses alike), (that is why I like investing in banks). The other options the banks have is to lower the “Freebies” and “Prizes” they have associated with their Credit Cards, time will tell how this all works out.



Free is a Good Price (but still can be expensive)

Thanks to me (and Mrs C8j) having Home Depot credit cards, we are now victims of yet another massive personal information breach, which may cause Financial Issues in the future for us, and I am not well pleased by this turn of events. It seems these kind of data thefts are becoming more and more prolific, and maybe it is time for us to cut the number of credit cards we have, so we have less presence in the credit world (that can be so easily stolen).

Data Breech at Home Depot

Thanks for Using Home Depot ?

The one good thing that has come out of this is that we get a year of free Equifax Premier (in Canada, something different in the US). To get this service, I was given a 1-888 number to call and after a  long wait, I got a hold of an Equifax rep, who after collecting some data on me, gave me access to their Premier Service for an entire year (usually about $20 a month service).

The hope is that this service will alert me in case someone uses the information from the Home Depot security breach to either: attempt to steal my identity ; or simply attempt to charge things on my credit vehicles. The service seems to take about 24 hours to get up and running.

I read on a Tumblr Home Page (the name of which is very NSFW), which stated:


Which is very true in this case, my identity info is now in the hands of dastardly thieves, but I got Free Equifax for a year? Not really that free is it?


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