A couple of questions???

[ohiostate]

I traded in a vehichle last May. That vehichle is still showing up as open with a balance but paid as agreed. I have 2 car loans now but the paid off account is making it look like I have 3 open with a balance of $28,000 more than it actually is.

1. Could this be hurting my score?

I have 5 credit card accounts, I have paid 4 of them off. Total credit limit of all 5 cards is $9500. The remaining card that I have not yet paid off has a CL of $1500 and the balance is $1400.

2. Does the ratio go by TOTAL CL? ($9500 CL- $1400 balance= 14.7%) Or is the the card being almost maxed out hurt my score?

[haulingthescoreup]

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@ohiostate wrote:

I traded in a vehichle last May. That vehichle is still showing up as open with a balance but paid as agreed. I have 2 car loans now but the paid off account is making it look like I have 3 open with a balance of $28,000 more than it actually is.

1. Could this be hurting my score?

I have 5 credit card accounts, I have paid 4 of them off. Total credit limit of all 5 cards is $9500. The remaining card that I have not yet paid off has a CL of $1500 and the balance is $1400.

2. Does the ratio go by TOTAL CL? ($9500 CL- $1400 balance= 14.7% ) Or is the the card being almost maxed out hurt my score?

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1. The car loan impact is probably minimal. Once you have an installment loan, any additional loans, especially with low util on those loans, probably don't do much.

2. For revolving util (completely different from installment util, btw) FICO mostly looks at overall util, but it also looks at individual util, especially if you have a maxed-out card (85 - 90%+ is considered maxed out.) Did you BT balances on the other cards to this one for a 0% or something? Good financial sense, but it does hurt your scores. My main concern is that other CCC's might react to that one maxed-out card. They're all so freaked out these days that you never quite know what might set them off. I'd probably try to knock a couple hundred bucks off that last card and then resume whatever payment strategy you have. Just a mini-insurance policy.

[ohiostate]

""Did you BT balances on the other cards to this one for a 0% or something?""

No...all the cards were maxxed out and we are trying to bare down and dig out of this mess.

The only reason we haven't done a whole lot with this card is it has 1 year no interest so we have til Nov. before the interest hits. BUT..it will be paid by June!!! 

[haulingthescoreup]

Gotcha. Nice machete work on the util! You should get a good jump from the four being paid off, and another when the fifth card is no longer maxed, and then almost paid off.

I say "almost", because most members here find that their scores are better when they have one card reporting a balance of under 10% of that card's CL. We usually do this by paying down the balance to 1-9% 5 days before the statement is due to drop, letting the statement drop and the balance report to the credit bureaus, and then paying the rest before the due date. Don't forget to pay the remaining balance, though, because you don't want to have to pay any interest, etc.

[marty56]

While it may not hurt your score, a manual review might leave the reviewer think you have more debt then you actually do which could affect things like a mortgage or a CLI.

I would contact the OC and ask them to update the balance.  My only cavet here is that they dont do something stupid like delate the entire TL, unless you have major derogs on the account.

[ohiostate]

"I say "almost", because most members here find that their scores are better when they have one card reporting a balance of under 10% of that card's CL. We usually do this by paying down the balance to 1-9% 5 days before the statement is due to drop, letting the statement drop and the balance report to the credit bureaus, and then paying the rest before the due date. Don't forget to pay the remaining balance, though, because you don't want to have to pay any interest, etc."

I'm sorry call me stupid but im not following how to do this. (Sorry) Can you give me an example?

My next questions.

A little more about my situation.

I have 5 CCs;

GE money- $6500 CL (just paid in full Friday $1940 PAID OFF)

HH Gregg- $1500 CL ($1400 balance, no int. til Nov.)

Walmart- $700 CL (paid in full last month $571 PAID OFF)

Credit One Bank- $450 CL (paid in full last month $420 PAID OFF)

HSBC- $300 CL (paid in full last month $272 PAID OFF)

Paid in full all cards except HH Gregg ($1400).  

Credit One Bank charge a monthly fee ($5.75)

HSBC charge an annual fee ($69.00)

Question is should I dump the Credit One and the HSBC? Because they are costing me money without using them. If I close them will it hurt my score?

If I close them I will still have 6 open accounts (house, 2 cars, and the 3 cards)

Thanks for your replys

Message Edited by ohiostate on 05-11-2008 07:59 PM

[haulingthescoreup]

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@ohiostate wrote:

I'm sorry call me stupid but im not following how to do this. (Sorry) Can you give me an example?

My next questions.

A little more about my situation.

I have 5 CCs;

GE money- $6500 CL (just paid in full Friday $1940 PAID OFF)

HH Gregg- $1500 CL ($1400 balance, no int. til Nov.)

Walmart- $700 CL (paid in full last month $571 PAID OFF)

Credit One Bank- $450 CL (paid in full last month $420 PAID OFF)

HSBC- $300 CL (paid in full last month $272 PAID OFF)

Paid in full all cards except HH Gregg ($1400).

Credit One Bank charge a monthly fee ($5.75)

HSBC charge an annual fee ($69.00)

Question is should I dump the Credit One and the HSBC? Because they are costing me money without using them. If I close them will it hurt my score?

If I close them I will still have 6 open accounts (house, 2 cars, and the 3 cards)

Thanks for your replys

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Hey, no one will call you stupid around here! This is so different from the way that people usually think about paying their cards that you have to mutter to yourself a bit before it all clicks.

I don't think my fingers can type this out again, and I hate to clog up server space with the how-to's, so let me post a link to where I described this earlier today:

How to time your payments for maximum util benefit

As for closing the two fee cards: your overall util is currently 15%. If you close them, with the same current HH Gregg balance, your util will be 16%, so no big deal there, if I'm doing my math right. Since these are builder/ rebuilder cards, there's a decent chance that they're your oldest cards, but they should continue to report for 10 years after closing, and by then, the impact probably won't be very big. The one area where you might see problems is that you will now have 3 revolving and 3 non-revolving accounts. There are score rewards for having half or fewer of all accounts with balances, AND fewer than half of revolving accounts reporting, AND at least one credit card reporting.

With only 6 accounts, and 3 automatically reporting balances (the mortgage and car loans), this means that ideally 0 credit cards should report balances. But since most people do better with 1 card reporting, you have a built-in problem. Your best bet would be to plan on eventually replacing the closed cards with one or two new and better CC's.

So if I were in your shoes, I would plan on closing the fee cards one month before the fees are due again. Make sure that you print off your current $0 balance on each, and hang on to this, because you just never know. Plan on eventually adding 1 or 2 more CC's to make your reporting math a bit easier in the long run. HTH


edit: dang freakin' recurring power/Internet failures!

Message Edited by haulingthescoreup on 05-11-2008 08:42 PM

[ohiostate]

Thank you so much!

The fee cards (HSBC) just tacked on the annual fee so now balance is $69, check is going out today to pay it IN FULL AGAIN!

Any suggestions on better cards?

(TU 581, EQ 521, EXP 570)

[Anonymous]

The good news in all of this for you is that, once you have reported utilization on all of your cards down below 10%, you've gotten the bulk of the benefit you can get by low utilization. Even if you have a card reporting a small balance that you'd rather it not have reported, you're only talking 3 to 5 points here. Going from 80% util to 10% typically gets you anywhere from 40 to 70 FICO points. (Of course, the CC have to get around to reporting the updated balances.)

So don't sweat the small stuff.

[RobertEG]

Hey Ohio,the two cards that you are considrering closing are low CL cards, so ditching them wont much affect your %util, and is most probably the right thing to do. The only reason I would offer in not closing them is that you will lose their credit history after ten years from closing, but if they have very short history now, then ditch em an remove them from your concern.  Even if cosed, they will remain in your CR for ten years, and continue to accrue credit history.  In ten years, will you need them? 

Low CL cards are a royal  pain in the butt to manage monthly, for a $300 CL card with a small balance of only $150 for last night at the massage parlor puts you at 50% util on that card.  I hate small llmit cards.