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Two quick card questions

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roadtoamex
Member

Two quick card questions

I have a couple of secured cards from a number of years ago that I continue to keep open as I've read that closing them would be a horrible idea. I have a couple of small automatic payments like netflix and sirius on each just to make sure the cards stay open. I had not used one of the cards for many months and when I setup a small monthly debit using it, I got an alert on my file that a dormant card had become active. (I wasn't aware a card could become dormant) and my score went up about 8 points just from that. 

 

My two questions are this:

 

1. I always pay in full every month and it seems this is the way to go according to the forums, low utilization = high credit score right? I often wonder however if it's a benefit to at least have a small balance carry over, aka let the card company make at least a couple of bucks off me. I still don't understand these complex formulas but I did notice that when my cards reported a small balance (Say $200 out of $2000 avail) my score jumped like 10 points. I guess I had paid a few days later than usual and they had already reported the balance before I zeroed it out like normal. This led me to believe that having really low utilization but keeping a small balance as opposed to $0 each month actually helps your score. It also seems that card companies don't want to send you new better card offers or CLI's if you never use your card really so that makes sense. So is it good to carry a small, say 5% balance each month?

 

2. Speaking of these secured cards, both will allow me to instantly deposit more balance, between the two of them, I could put another $8000 on them to max them and I can easily afford to do this if it would be benecial. Is it worth making those additional deposits to add another $8000 to my avail credit on my file? My utilization is already close to zero and I would much rather put that $8000 into investments that will deliver solid interest rather than let it sit over at capital one, unless that would mean significant point increase. 

 

Thanks so much for all the help!

 

 

Message 1 of 8
7 REPLIES 7
1_2
Contributor

Re: Two quick card questions


@roadtoamex wrote:

I have a couple of secured cards from a number of years ago that I continue to keep open as I've read that closing them would be a horrible idea. I have a couple of small automatic payments like netflix and sirius on each just to make sure the cards stay open. I had not used one of the cards for many months and when I setup a small monthly debit using it, I got an alert on my file that a dormant card had become active. (I wasn't aware a card could become dormant) and my score went up about 8 points just from that. 

 

My two questions are this:

 

1. I always pay in full every month and it seems this is the way to go according to the forums, low utilization = high credit score right? I often wonder however if it's a benefit to at least have a small balance carry over, aka let the card company make at least a couple of bucks off me. I still don't understand these complex formulas but I did notice that when my cards reported a small balance (Say $200 out of $2000 avail) my score jumped like 10 points. I guess I had paid a few days later than usual and they had already reported the balance before I zeroed it out like normal. This led me to believe that having really low utilization but keeping a small balance as opposed to $0 each month actually helps your score. It also seems that card companies don't want to send you new better card offers or CLI's if you never use your card really so that makes sense. So is it good to carry a small, say 5% balance each month?

 

2. Speaking of these secured cards, both will allow me to instantly deposit more balance, between the two of them, I could put another $8000 on them to max them and I can easily afford to do this if it would be benecial. Is it worth making those additional deposits to add another $8000 to my avail credit on my file? My utilization is already close to zero and I would much rather put that $8000 into investments that will deliver solid interest rather than let it sit over at capital one, unless that would mean significant point increase. 

 

Thanks so much for all the help!

 

 


I cant speak to adding 8000 deposits on your secured cards. I have a Capital One secured card for 1000.00 that was my first card in 2010 when I started rebuilding. It has served its purpose now and I will be cancelling it since (I believe this is correct) it will still report for the next ten years, closing it wont hurt my score. Someone more informed than me might want to address that issue though.

I use Credit Karma just to keep an eye on my credit and I have noticed that since I pay in full each month they give me a grade of C on utilization but IF I would leave a small balance I would get a grade of A. I know for a fact that Credit Karma's credit scores are way off base at least in my case so I dont know if they are correct in that grading or not but when I was about to close on my house my lender did tell me to leave a small balance on one card right before they did the last pull on my credit. I did as he said and my score was slightly higher on closing than it was when I first intiated buying my house.








Closed on home Jan 30, 2013. Yay!

Capital One (secured) $1000.00 | Capital One (former Orchard Bank) $500.00 | First Premier $500.00 | Credit One Bank $750.00 | Wal-Mart $3550.00 | Citi Thank You Preferred $6,800.00 | Discover It $4,800.00 | AMEX BCE $4,500.00
Message 2 of 8
Creditaddict
Legendary Contributor

Re: Two quick card questions

when your balance reports on your statement most likely that is also what is reporting on your credit report.... you don't need to not pay in full if you can pay in full at that point because the pluses or minuses of the balance reporting have done there due to your credit already... by not paying in full and paying interest that is the only thing at that point you are doing which is costing you money paying interest.

what you see people talk about is paying BEFORE the statement to bring the utilization of the card down to under 9% for best scoring.

 

I don't know about adding more secure line to your cards... what about unsecured cards now... how long have you had the secured? what are scores?

Message 3 of 8
user5387
Valued Contributor

Re: Two quick card questions

1.  Closing cards has no immediate effect on your AAoA.

 

2.  Closing cards may affect scoring via utilization, but you said that your utilization is low.

 

3.  Letting a balance report is not the same as carrying a balance.

 

4.  Letting a small balance report may help your scores.

 

5.  Carrying a balance doesn't help your scores, but individual lenders may like you more (because of paying interest).

 

6.  Re adding funds to a secured card -- this may make sense if your CLs are low, and you wish to boost them as a means of boosting CLs on future CC approvals.  I don't know if you're in that situation or not.

 

Message 4 of 8
SunriseEarth
Moderator Emeritus

Re: Two quick card questions


@roadtoamex wrote:

I have a couple of secured cards from a number of years ago that I continue to keep open as I've read that closing them would be a horrible idea. I have a couple of small automatic payments like netflix and sirius on each just to make sure the cards stay open. I had not used one of the cards for many months and when I setup a small monthly debit using it, I got an alert on my file that a dormant card had become active. (I wasn't aware a card could become dormant) and my score went up about 8 points just from that. 

 

My two questions are this:

 

1. I always pay in full every month and it seems this is the way to go according to the forums, low utilization = high credit score right? I often wonder however if it's a benefit to at least have a small balance carry over, aka let the card company make at least a couple of bucks off me. I still don't understand these complex formulas but I did notice that when my cards reported a small balance (Say $200 out of $2000 avail) my score jumped like 10 points. I guess I had paid a few days later than usual and they had already reported the balance before I zeroed it out like normal. This led me to believe that having really low utilization but keeping a small balance as opposed to $0 each month actually helps your score. It also seems that card companies don't want to send you new better card offers or CLI's if you never use your card really so that makes sense. So is it good to carry a small, say 5% balance each month?

 

2. Speaking of these secured cards, both will allow me to instantly deposit more balance, between the two of them, I could put another $8000 on them to max them and I can easily afford to do this if it would be benecial. Is it worth making those additional deposits to add another $8000 to my avail credit on my file? My utilization is already close to zero and I would much rather put that $8000 into investments that will deliver solid interest rather than let it sit over at capital one, unless that would mean significant point increase. 

 

Thanks so much for all the help!

 

 


Not necessarily.  Closing a card could drop your UTIL, but it won't affect your AAoA until it falls off your reports.  That takes ~10 years. 

 

I'd say closing a card that costs you money, providng you have other credit options, is an excellent idea



Start: 619 (TU08, 9/2013) | Current: 809 (TU08, 3/05/24)
BofA CCR WMC $75000 | AMEX Cash Magnet $64000 | Discover IT $46000 | Disney Premier VS $43600 | Venmo VS $30000 | NFCU More Rewards AMEX $25000 | Macy's AMEX $25000 Store $25000 | Cash+ VS $25000 | Altitude Go VS $25000 | Synchrony Premier $24,200 | Sony Card VS $23750 | GS Apple Card WEMC $22000 | WF Active Cash VS $18,000 | Jared Gold Card $16000 | FNBO Evergreen VS $15000 | Citi Custom Cash MC $14600 | Target MC $14500 | BMO Harris Cash Back MC $14000 | Amazon VS $12000 | Freedom Flex WEMC $10000 | Belk MC $10000 | Wayfair MC $4500 ~~
Message 5 of 8
SunriseEarth
Moderator Emeritus

Re: Two quick card questions


@user5387 wrote:

1.  Closing cards has no immediate effect on your AAoA.

 

2.  Closing cards may affect scoring via utilization, but you said that your utilization is low.

 

3.  Letting a balance report is not the same as carrying a balance.

 

4.  Letting a small balance report may help your scores.

 

5.  Carrying a balance doesn't help your scores, but individual lenders may like you more (because of paying interest).

 

6.  Re adding funds to a secured card -- this may make sense if your CLs are low, and you wish to boost them as a means of boosting CLs on future CC approvals.  I don't know if you're in that situation or not.

 


+100



Start: 619 (TU08, 9/2013) | Current: 809 (TU08, 3/05/24)
BofA CCR WMC $75000 | AMEX Cash Magnet $64000 | Discover IT $46000 | Disney Premier VS $43600 | Venmo VS $30000 | NFCU More Rewards AMEX $25000 | Macy's AMEX $25000 Store $25000 | Cash+ VS $25000 | Altitude Go VS $25000 | Synchrony Premier $24,200 | Sony Card VS $23750 | GS Apple Card WEMC $22000 | WF Active Cash VS $18,000 | Jared Gold Card $16000 | FNBO Evergreen VS $15000 | Citi Custom Cash MC $14600 | Target MC $14500 | BMO Harris Cash Back MC $14000 | Amazon VS $12000 | Freedom Flex WEMC $10000 | Belk MC $10000 | Wayfair MC $4500 ~~
Message 6 of 8
Leadberry
Established Contributor

Re: Two quick card questions


@roadtoamex wrote:

I have a couple of secured cards from a number of years ago that I continue to keep open as I've read that closing them would be a horrible idea. I have a couple of small automatic payments like netflix and sirius on each just to make sure the cards stay open. I had not used one of the cards for many months and when I setup a small monthly debit using it, I got an alert on my file that a dormant card had become active. (I wasn't aware a card could become dormant) and my score went up about 8 points just from that. 

 

My two questions are this:

 

1. I always pay in full every month and it seems this is the way to go according to the forums, low utilization = high credit score right? I often wonder however if it's a benefit to at least have a small balance carry over, aka let the card company make at least a couple of bucks off me. I still don't understand these complex formulas but I did notice that when my cards reported a small balance (Say $200 out of $2000 avail) my score jumped like 10 points. I guess I had paid a few days later than usual and they had already reported the balance before I zeroed it out like normal. This led me to believe that having really low utilization but keeping a small balance as opposed to $0 each month actually helps your score. It also seems that card companies don't want to send you new better card offers or CLI's if you never use your card really so that makes sense. So is it good to carry a small, say 5% balance each month?

 

2. Speaking of these secured cards, both will allow me to instantly deposit more balance, between the two of them, I could put another $8000 on them to max them and I can easily afford to do this if it would be benecial. Is it worth making those additional deposits to add another $8000 to my avail credit on my file? My utilization is already close to zero and I would much rather put that $8000 into investments that will deliver solid interest rather than let it sit over at capital one, unless that would mean significant point increase. 

 

Thanks so much for all the help!

 

 


Your credit score is maximized when you let one credit card report 1%-9% of the CL and the rest report $0.  You don't have to let lenders make any money off you.  Let a small balance report on your statement, then after the creditor updates the TL with the CRA's, pay off the balance (make sure this is before the due date, obviously).  This way, your score is maximized and you pay no interest.  Note that this isn't something you really need to do all the time; the extra several points are only really important if you're going to be applying for new credit.

 

Also, who is servicing your secured CC's?  Have you tried to see if you could have them graduated to unsecured CC's?

   
FICO Scores 800+
Message 7 of 8
subwaysandwich
Frequent Contributor

Re: Two quick card questions

Those two questions are pretty lengthy to be considered "quick"... deceptive..

Message 8 of 8
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