Almost Debt Free But Don't Know Where To Go From Here

[MarineVietVet]

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@Anonymous wrote:

marinevietvet:  you seem to be a wealth of information I appreciate that you are willing to share.  With all these open credit cards with $0 balances that I do NOT plan to use; do I leave them or close them for fear if I don' the CC company will.  There is one that I have been using a little, but as soon as I use it, I transfer funds equal to or more than what I spent to it so that it will always have a $0 or $-0 balance.

 Thanks

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How many open accounts do you have? What I do is use a different card to pay a recurring monthly charge, i.e. water bill, cable bill, etc. so I don't have to remember what card to use this month to keep it active. That works very well for me.

Proper utilization of revolving credit is very important in scoring. You figure utilization by dividing your total balances by your total credit limits. Try and keep that utilization at 1-9%.

Showing a zero balance on all your cards each month can sometimes actually hurt your score because FICO likes to see usage. If you pay the balance before it reports to the credit bureaus then FICO doesn't know it has been used.

What I try to do is only let one card show a small balance on my statement and then I pay it in full before the due date to avoid finance charges. My other cards I pay in full before the statement posts so that they always show a zero balance.

When I said I wouldn't close an account you have to remember that's only my opinion. You have to do what seems right for you. If closing some accounts will help you not to worry as much then by all means do so.

I know I don't explain things very well sometimes.  Others do a much better job. Just keep asking questions. You'll get the answers.

[Anonymous]

Right about the reporting balance.  I've been hit both ways by that.  I've been hit with a "maxed out" card when actually I had paid the balance off, and I've been hit with a "zero" balance when my payment was posted earlier than I expected.  It's been frustrating.

But today I found the *solution* with my discovercard, by enrolling in their scorewatch program.  So I will show a balance of about $9 per month each time, and I probably won't use it other than that.  Meanwhile, I can monitor one of my reports as I am waiting for the results of some goodwills.

I only keep three accounts.  But I mostly do this because I've had up to 10 lines of revolving credit and I got very confused by it all.  Honestly, I don't even need three.  But something's got to balance all those student loans!

[llecs]

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cajuntiger wrote:
This is what I was told by a coach who has been there and now has perfect credit.  There apparently is a tipping point that if you have access to too much credit or too many accounts it will start to effect you negatively.  You may want to get a second opinion on that, but that is what I was told.

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Per your FICO score, there is a tipping point at 30 accounts, opened or closed. If your FICO report shows that you have 30 or more accounts, your report will display an annoying red flag next to "number of accounts" on your Credit-At-A-Glance page. I think also that some reports, usually on TU, will list that as a negative on the 3rd page of your report. In short, yes, there is damage for having too many accounts, but it is so minor that it probably won't result in too much of a loss, if at all. Seems like someone recently did an experiment by having 30 report and they saw no change in the long run.

Now juggling more than 5 can be a challenge. I manage 25 open CCs between DW and myself and it gets to be a pain. Each week it takes just over an hour to check each account online to make sure balances are in check, no unauthorized charges, etc. Also in the lender's point of view, having too many accounts can be seen as a negative, especially if you are carrying balances.