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New Contributor
ezover
Posts: 69
Registered: ‎02-27-2009
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Confused

Hello folks, newbie here. I,m a little confessed, all the messages I read are about folks trying to raise their cl.

I just went over my credit report and canceled 3 cc for myself and closed 5 or 6 for the wife.

my thoughts are, the less c.c. I have the less likely someone could commit fraud with it.

 

and for myself, I do not need to have 20 or 30k worth of credit cards. I have 3 open cc atm. Considering just going to one but from what I'm reading I should keep all 3 open.

please no flames just confused.

 

 

 

getting there
TU 770 5/14/09
EQ 740
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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Confused

Hi, ezover, welcome to the forums!

It's a pretty common confusion that having lots of available (= unused) credit is bad. In fact, it's good. It tends to help your FICO credit scores, and if you ever do need credit (auto loan, mortgage, emergencies), there's a halo effect: when creditors see that you already have a good amount of credit, they're more likely to extend you credit.

People worry a lot about fraud, but there are great protections built in the CC system. Just keep an eye on the accounts, in case you suddenly find that you've purchase 2 dozen sled dogs or something unexpected. When you see an unauthorized charge, get on the phone with the creditor PDQ. This preserves your rights.

If someone has problems handling temptation, or if they are hopelessly disorganized, then there's an argument for closing accounts. But I'm definitely the second (hopelessly disorganized), and yet I've developed ways to stay on top of things. My days of credit stupidity are behind me, and I don't plan to ever go back.

If you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)

These will give you the background knowledge you need to understand what you read here on the forums.

All this being said, if you have carefully chosen your cards, 2 or 3 (or 4) can wind up being all you need. It's like any tool: the more skillful you become, the more useful it is. If you'd like to get an idea what conservative, high-scoring credit consumers look like, read the FICO High Achievers thread linked in my siggy below.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Valued Contributor
Guardian
Posts: 1,148
Registered: ‎04-23-2008

Re: Confused


ezover wrote:

Hello folks, newbie here. I,m a little confessed, all the messages I read are about folks trying to raise their cl.

I just went over my credit report and canceled 3 cc for myself and closed 5 or 6 for the wife.

my thoughts are, the less c.c. I have the less likely someone could commit fraud with it.

 

and for myself, I do not need to have 20 or 30k worth of credit cards. I have 3 open cc atm. Considering just going to one but from what I'm reading I should keep all 3 open.

please no flames just confused.

 

 

 


No need to worry, we generally don't flame people for being confused, that's why everyone is here, so welcome and hopefully you can get your questions answered in a way that make sense to you. As suggested by my friend here, read up on some of the stickys that have been created regarding various aspects of credit and scoring and it should clear up some, if not all, of your concerns.

 

General rule of thumb is moderation. Too much credit is bad because it paints you as being overextended and a potential risk of getting way over your head, too little credit is bad because it paints you as being not established or scared of credit or unable to handle credit properly, again a risk factor. Try to keep a nice mix of various types of credit, loans, revolving credit, store credit, installments and not too much of each as each have their own downsides. Avoid too many inquiries as that paints you as someone hunting for credit and that could be a red flag and plus it kills your score, so when you do apply for credit don't go overboard, at least not all at once. Generally don't try to get too many new accounts as it hurts your average credit history age and if you can avoid it don't close your older accounts as they help with your age of credit and closing them loses their benefits to you to some extent. Try to use your credit consistently, not extensively, but consistently to show that you can be responsible and that way you show activity without increasing your usage and pay down your balances as often as you can because you don't want your debt to available credit ratio to be too high, that makes you appear riskier.

 

Anyway, we can go on forever as you can imagine but that should be a good place to start and read the post about closing credit cards because that is often time hurtful to you and if you absolutely must do it, make sure you do it right so you don't sabotage yourself. Afterall if you close credit you need, then when you have to apply for them again you double whammy yourself with the inquiry hits and loss of credit age and so on. So make sure you have a clear plan of action so you don't back yourself into a corner that ends up hurting you. Good luck.


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