Credit Cards Before the Mortgage?

Credit Cards Before the Mortgage?

In another symptom of the subprime mortgage meltdown, stressed-out borrowers may be taking care of their credit card bills before making their mortgage payments.

According to a report from consumer credit reporting agency Experian, borrowers with credit scores of 620 or below are 30 days late more often with mortgage payments than with payments on bank-card debt.

The survey noted that historically, consumers have prioritized mortgage debt over credit card debt as they “traditionally view their home as their most valuable asset which should be protected at all costs.”

But the current housing slump, in a very fundamental way, has changed the math that governs the way subprime borrowers deal with debt. 

Consumers who have dealt with phone calls, letters and wage garnishees from credit card collectors in the past may want to avoid repeating the experience.  Since home loans usually have a much lower interest rate than credit cards, most credit counselors will tell borrowers who are in over their heads to pay down their credit card debt first above all else.