topic Re: DROP a Credit Card to Increase Score? in Credit Cards

DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 02:34:54 GMT

I have three credit cards and have now have the balance low on all three. BUT I wonder if it is best to close one.

I hear having open balances is great but if I closed one - it is one less card to manage. does this make sense to close one of the accounts? I boosted my score from the mid 600's to726 so just looking for ways to take it higher.

thoughts?>

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 02:46:43 GMT

Unless the card is costing you an annual fee, do not close. If you can only mange two paymentsonly use two and then rotate. 3 cards are not hurting you unless you are carrying balances on all three.

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 03:15:04 GMT

ahh now that is interesting. I have a small balance on all three - should i elim the balance on one of them? would that in itself help?

thanks!

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 03:18:32 GMT

Either that or open another card.

Re: DROP a Credit Card to Increase Score?

haulingthescoreup — Thu, 15 Nov 2007 04:07:13 GMT

TU especially has an obsession with having more than half of your open accounts (including mortgages, etc) reporting. So I agree with Brammy, only let 2 of your three accounts report each month, and if you get another card, which I think is good idea, only let 2 (=half) report. If you can, the ones that do report should be under 10%.

My goal for perfect CC ownership: a total of 5 cards max, 4 from the majors/ banks (Visa, MC, AmEx, Disc, doesn't have to be one of each) plus maybe one store card or gas card, all with warm fuzzy high CL's. That's it, folks! Too much work to keep track of more.

Re: DROP a Credit Card to Increase Score?

haulingthescoreup — Thu, 15 Nov 2007 04:10:53 GMT

For general purposes, never let any card report 50% or more of its credit limit. So if you have a $2K CL, let $900 or less report. If you can't get all of them under this number, get as many as possible under 50%, and then go after the other(s).

FICO looks at the util on each individual card, plus it looks at your total util.

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 04:14:55 GMT

I find this odd - that credit score worthiness can be influenced by having lots of credit cards. at a moments notice, i could max them out and bankrpt if i wanted to.

i actually also have a home depot card - so i have '3' majors and '1' product. so should i get a BestBuy card and get a nice LCD TV and not pay for it for 2 years? and will that in fact help my credit? seriously?

So my idea is '3' majors 1=zero balance, the others minor balances and then the '2' others - with moderate balances. i also have a mortgage and a equity loan. pay all on time and keep my score high?

interesting and ironic. BUT seriously if i got a best buy card would that help or hurt?

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 04:21:48 GMT

If you have three majors try not to have a balance at all on more than two at reporting time. When you pay one off, you can rotate it with the other two.

BTW the max it out and run theory comes into play when you tell the bank what your income is. They only care that you can meet your minimum but in that case they can ratejack you and keep you in debt forever. If you get that LCD TV. Make sure however long, 2 or 4 years its at 0%.

Message Edited by Brammy on 11-14-2007 11:21 PM

Re: DROP a Credit Card to Increase Score?

haulingthescoreup — Thu, 15 Nov 2007 04:30:31 GMT

@Anonymous wrote:
I find this odd - that credit score worthiness can be influenced by having lots of credit cards. at a moments notice, i could max them out and bankrpt if i wanted to.
i actually also have a home depot card - so i have '3' majors and '1' product. so should i get a BestBuy card and get a nice LCD TV and not pay for it for 2 years? and will that in fact help my credit? seriously?
So my idea is '3' majors 1=zero balance, the others minor balances and then the '2' others - with moderate balances. i also have a mortgage and a equity loan. pay all on time and keep my score high?
interesting and ironic. BUT seriously if i got a best buy card would that help or hurt?

What gets FICO all excited is to see that you have credit, and you use it, but just barely. Getting a card in the mail and sticking it in your sock drawer doesn't show that you can manage your credit. Having half or fewer of your cards reporting each month, each showing under 10% usage of the available balance, gives you quite a score boost.

Now, no one would want to live like that forever --too much work! But if you are headed toward a credit app (mortgage, etc), this is a good way of goosing your scores. Otherwise, keep them PIF'd or whatever makes sense to you financially, and then 6-8 weeks before you do apply for something, get them tuned up.

Remember that FICO scores are attempting to predict your credit behavior. If they see that you have available credit, but you can't be bothered to use very much of it, that makes you look like a good risk.

BTW, if your Home Depot card is mostly white, and has the MasterCard logo, it gets counted as a bank card, not a store card. Go figure!

Edit: whoops! stepped on Brammy's post. Listen to her--she knows!

Message Edited by haulingthescoreup on 11-14-2007 08:30 PM

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 04:39:41 GMT

Home Depot is orange and admin thru citibank. I like the 6 months or 1 year to pay - but i still pay $100month so i am not facing a huge bill when due.

I am going for a car lease - once i have this in hand, i can experiment since i have nothing really to lose. i might go for that LCD via 2 years to pay... if i manage my debt - FICO wll love me.

weird i will report what i find out and experience

Re: DROP a Credit Card to Increase Score?

haulingthescoreup — Thu, 15 Nov 2007 04:42:17 GMT

Sounds like you have a store card--good for you! I still can't find the original source that says that everyone should have one store or gas card, but it seems to be the conventional wisdom by now.

Re: DROP a Credit Card to Increase Score?

Anonymous — Thu, 15 Nov 2007 05:19:45 GMT

Maybe you should look into the BB store card when you get ready for your TV. They just had 48 mos same as cash. I took em up on a dishwasher and Xmas at 18 mos same as. Just don't go over 90% on any one card, that's a max out and it will hurt you as badly as a collection. the store and gas cards come into play with the mix of credit. IF you can make yours ideal, go for it.

Ok confused here, can somebody help me out.

Anonymous — Thu, 15 Nov 2007 09:53:37 GMT

I have 3 credit cards 1. first premier limit $350 with $0 bal. 2. Capital one limit $750 with $0 bal, and 3. Wamu $3000 limit with $1700 bal. I can't pay the wamu off yet should I just leave it alone and work on it? Get anohter card to show more credit with less usage? What is the best course of action my ficos are 573, 612, and 663. Trying to get them as high as possible after my BK.

Re: Ok confused here, can somebody help me out.

stpn2me — Thu, 15 Nov 2007 11:08:43 GMT

Never EVER max out your cards! I put $1000 on my BoA Visa with a $1500 limit. I lost 14 pts that day! I had the $1000 put back on and guess what? My score went back up 14 pts. That was a huge hit!

Re: Ok confused here, can somebody help me out.

Anonymous — Thu, 15 Nov 2007 13:03:13 GMT

pavetim wrote:

I have 3 credit cards 1. first premier limit $350 with $0 bal. 2. Capital one limit $750 with $0 bal, and 3. Wamu $3000 limit with $1700 bal. I can't pay the wamu off yet should I just leave it alone and work on it? Get anohter card to show more credit with less usage? What is the best course of action my ficos are 573, 612, and 663. Trying to get them as high as possible after my BK.

Work on geting the WaMu down. They will be generous with your CLIs if you only keep them paid and more than min. How old are your cards? I'd D6 the first premie ASAP. Not only do you probably have an annual fee but a monthly maintenance fee as well. Try Household Bank.