@Anonymous wrote:Great advice, thanks. I should have joined this forum a long time ago.
This is what I'm doing now:
Paying off the 2nd credit card, the other card will have a <9% credit utilization. 2 Cards $0 Balance, One at $250.
One poster said I have enough lines of credit/loans open (4) and don't need any more, I tend to agree because the moment I apply for another account my score will dip. My rating is already "FAIR" according to Discover Card and while I understand they aren't accurate I'm not happy about it.
Last question
I have an installment loan (3 years, $1,000) and just brought the balance down to $350, should I just pay it off now or continue with the $32 monthly payments to build my history?
I think you should just pay off the installment loan. I've never completely understood whether mix of credit involves open lines or whether closed lines count (I have so many student loans I'll never have to worry about not having installment debt). But I don't see the point of taking out loans just for the purpose of having open installment loans. Someone please correct me if I'm wrong.
Starting Score: ~500 (12/01/2008)
As to the installment loan, I would just continue paying it on schedule. FICO also likes to see "A mix of credit - that includes credit cards and installment loans". The lack of an installment loan is not going to have a truly adverse impact but since it's already open then just leave it that way. Once it is paid off and closed it should remain on your credit report for up to ten years as a positive tradeline.
As previous posters have already said, ignore Discovers monitoring service advice and EVALUATION of your credit. The scores have no meaning relative to FICO scores. You can use the reports you pull from there to monitor what is being reported to the bureaus and ensure it is correct. If you want to know where your credit stands and what a lender would see then invest the money and pull your TU and EQ scores from here. As others have said you may be pleasantly surprised what your real scores are if in fact there is no negative information in your files.
@Anonymous wrote:No to get off the topic here but in refernce with what MarineVietVet was saying how often would you say you should use a card that you don't really use too often anyway just for something to show up from time to time and then pay it off? For instance I haven't used my Navy Fed credit card in like 7 months or so, would you say that useing it every 3 months for a tank of gas letting that sit on the card for like a month so it hit's your credit then paying it off is showing activity on it? I know credit is a slippery slope but I think that's a sound theory isn't it?
You should use the card occasionally so that it doesn't get shut down by the issuer. But that's not what I think you are asking. I think you're asking specifically about letting the balance report. I've read that a card that repeatedly reports a $0 balance gets ignored for utlization, but I'm not sure how accurate that is. I've also read about people being dinged when they use a card that has sat "dormant" for a while, i.e., FICO hasn't seen a balance. Let's put it this way, what you're suggesting can't hurt you. Even if it dropped your score a few points because you fell outside your FICO sweetspot, you'd be right back there the next month.