Q. I read with interest your article on closing costs. As it turns out we were about to make a bid on a condo for our daughter. I did as you recommended, and negotiated with the seller to pay 3% of the sales price in closing costs. Lo and behold on the day of closing we were informed that the lender had reduced the amount by one-third?!?!? This move was completely unexplained. Now we are stuck, after the fact, trying to get the seller to cut us a check for the balance. What can we do?

A. Legally, there‘s nothing you can do. Once you signed the mortgage documents you “agreed” to his “counter-offer” about the closing costs. Had you been willing to stop everything right there and refuse to close the deal unless he paid what he had agreed to pay, you might have gotten the extra money.

But it’s very hard to walk away from a closing and very few people are willing to do that. The attitude is to normally bite the bullet. You have our sympathy and remember you did get the seller to pay part of your closing costs.

Q. I would like to know how paid off and not used store credit cards affect my credit score. Should I close them or should I leave them open (I don't want to use them any more)?

A. A paid off credit card is a plus when calculating your credit score – so don’t cancel them.

That’s because the standard formula lenders use considers how much of your available credit you’ve spent.

Let’s say, for example, that you have three credit cards, each with a $3,000 credit limit. You have one that is paid off, but you owe $1,000 on each of the other two.

You would have $9,000 worth of credit and owe $2,000, or 22.2% of your available credit. 

If you canceled the card with no balance, you would reduce your available credit to $6,000 but still have $2,000 in debt. The cold-hearted credit score formula now calculates that you’ve spent 33.3% of your available credit and will punish you for that.

The best way to boost your credit score is to keep your all your cards and payoff as much of the balance as you can. Cut the cards up if that helps, but don’t close the accounts.

Have a question about your finances? Ask us at editors@interest.com.

e-mail article | print article

| 1 | 2 | 3 | 4 | 5 |