This is a YouTube video titled "Should You Pay off Your Credit Cards?! 💳" containing a financial advice talk recorded on October 7, 2023. The speaker discusses common advice about paying off credit cards before applying for a home loan, explaining why paying off the full balance may not significantly increase buying power or credit score, and suggests a more strategic approach to managing credit balances.
Many people receive advice that they should pay off their credit cards before applying for a home loan. I know the advice comes from a good spot, but it doesn't always connect at the end of the day. Normally you do this for one of two reasons. To either open up your buying power or increase your credit score. But most credit cards have a minimum payment of 25, maybe $75 a month. So if you pay the whole credit card balance off, let's say it's five or ten grand, you only opened up 25 to $75 a month more for a mortgage payment. That's not that big of a difference in a home loan. That money could have been utilized more efficiently. And then for the credit score part, just spray money everywhere and pay everything off. And it probably will increase the credit score. But you also could take a more calculated approach. We can help you get with the credit bureaus and show you exactly what to pay down, how much to pay it down. So you sprinkle the money just so so to where you get the score, where it needs to be. But you don't have to pay all the balances off, just pay them down a little. You hold more money back for yourself. It's a win win all the way around. That's why we're there to help.
