Are open-ended LOC bad?

Anonymous · ‎01-16-2018

When I was younger I had a line of credit with my credit union. I loved it for its convince. God divorced and destroyed credit. Spent the past few years getting everything straight and now I'm in a position where I could get another one. However I don't want to do it if it's damaging to my fico I've worked so hard to get.

Anonymous · ‎01-16-2018

An LOC is not considered bad in itself. It's just treated by FICO like another credit card (revolving line of credit) -- with a balance and a credit limit.

That said, it won't help your score either. You already have plenty of revolving tradelines (7 in your signature).

An alternative strategy to an LOC is to build up a big emergency fund of cash. The situations when you might have used the LOC (i.e. go into high-interest debt) you can draw instead on the cash in the big savings account.

You can do both of course as well.

Anonymous · ‎01-16-2018

Im not actively looking for credit currently. My biggest focus is paying down my uti which is currently at 36% and I don't like that feeling. I get offers but I'm not willing to accept any of them as I wouldn't want to spend the needed amount to meet the new member bonuses so I'd rather wait. Of course that's my goal this year to pay off the 22K between the DW and I grew after buying our house. Made the decision and had to fix the rear end on my car lol. But this year is the tedious journey of getting back to 8% UTI. It'll be my own reward to myself for being 30 lol. Then after I want to open a CSP and a LOC I believe.

Anonymous · ‎01-16-2018

Side note, my scores are pinned down by awful 6 90 lates on nelnet from 2014 on five diff stupid SL. I failed to update my new address timely and went out of deferment at the same time. Onward and upward I was younger and way dumber then.

Anonymous · ‎01-16-2018

Best of luck! If the two of you feel like it, you might want to make your journey not merely to 8%, but all the way to 0%. Paying off the CC debt in entirety. Of course after that you'll want to use at a couple cards and pay them in full each month, but going the whole route and paying off the entire high-interest debt may make you feel best.

Anonymous · ‎01-17-2018

jabrown2999 in reading the posts in this thread ... paying down or off your debt and not open anymore credit at this time. You need to develop the good credit and savings habits that will prevent what happened to you in the past. Understand your dilemma ... have walked the walk.

SouthJamaica · ‎01-17-2018

@Anonymous wrote:
When I was younger I had a line of credit with my credit union. I loved it for its convince. God divorced and destroyed credit. Spent the past few years getting everything straight and now I'm in a position where I could get another one. However I don't want to do it if it's damaging to my fico I've worked so hard to get.

Not at all bad for your credit. As pointed out by CGID it's treated in scoring as a revolving line of credit, same way a credit card is treated.

I find them very useful.