Beginner Credit Questions

[Anonymous]

I have been reading the forums for the past few days and I found answers to a lot of my credit questions (thanks to everyone who posted here).  I still have a few beginner questions that need clarification for me.

#1

I understand that I should keep my util between 1-9% on my revolving credit.  Should my overall util for my revolving credit be in this same range then?  If a CC does not offer a grace period, should I completely stop using this card, or should I keep putting money on it for util.

#2

I have a store card from Sams Club, are store cards treated the same as CC's?  Should I keep my util on this card between 1-9% as well?  Also my card is listed on my CR as inactive.  Is this bad?  If so can I reactivate it?

#3

I had a electric bill reported to a collection agency after a few months of being late.  When the agency called me to collect it I paid it off right away.  Since I don't see a collection on my CR's does this mean I'm in the clear? (happened about 6 months ago)

[Anonymous]

CC with no grace period? what's the point of this?

1-9 on on upto 4 cards. PIF the rest and rotate

Staore card are not as good as bank cards as far a FICO in concerned, 

The UTL affect the same

If you paid it before it got reported you are good to go. 

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PKMG wrote:

I have been reading the forums for the past few days and I found answers to a lot of my credit questions (thanks to everyone who posted here).  I still have a few beginner questions that need clarification for me.

#1

I understand that I should keep my util between 1-9% on my revolving credit.  Should my overall util for my revolving credit be in this same range then?  If a CC does not offer a grace period, should I completely stop using this card, or should I keep putting money on it for util.

#2

I have a store card from Sams Club, are store cards treated the same as CC's?  Should I keep my util on this card between 1-9% as well?  Also my card is listed on my CR as inactive.  Is this bad?  If so can I reactivate it?

#3

I had a electric bill reported to a collection agency after a few months of being late.  When the agency called me to collect it I paid it off right away.  Since I don't see a collection on my CR's does this mean I'm in the clear? (happened about 6 months ago)

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[Anonymous]

Thanks for the answer. 

 Is there a certain range my total util for those four credit cards should be at though? Ex: If I had the four cards at 1%+1%+1%+1% (total 4%) would that be any different than having 9%+9%+9%+9% (total 36%)?

And if store cards do not affect the FICO score as much as CC's, should I include the store card in the rotation or leave it at 0.

[Anonymous]

As long as the overall total UTL is 1-9 and and each CC you have a balance on is 1-9 you are good.

Shoot for 5% on each so any fin charge will still keep you under 9%

I am doing this my self-

6 cards 2 at 0 bal

4 at 9%.

Example:

9% of 1000 is $90

4 cards each with a $1000 CL = $4000

$90 X4 = 360

360/4000 = 9% overall

[Anonymous]

Keep them in the rotation-

What I mean by this if you ever add more credit get bank cards.

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PKMG wrote:

Thanks for the answer. 

 Is there a certain range my total util for those four credit cards should be at though? Ex: If I had the four cards at 1%+1%+1%+1% (total 4%) would that be any different than having 9%+9%+9%+9% (total 36%)?

And if store cards do not affect the FICO score as much as CC's, should I include the store card in the rotation or leave it at 0.

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[fused]

Hi and welcome, have you read Tuscani's credit scoring 101 thread below?

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

[Anonymous]

Timothy:

Thanks for all the help. 

 One more dumb question, you said you do 5% util to save room for finance charges.  Does this mean that when I put 5% on my card that I must take the finance charges to get the util out of it?  I have always been putting 1%-9% on my cards and paying them back in the grace period.  Am I doing this wrong?

Also I didn't use my store card for over a year and now my CR says the account is closed / inactive.  I'm guessing that's the point of rotating cards to avoid cards being closed  

Can you actually reactivate a store card if they closed it due to inactivity?

Fused:

Thanks for the advise.  I read the credit 101 thread, and pretty much all of the recommended links, just need some clarification. 

[Anonymous]

No you do not- need to have a fin charge -

You just need the 1-9% post to the statement-

Pay the ENTIRE balance down to 5% before the statement posts not just the previous statement balance.

Not everyone can PIF every month-

Even fewer can pay the Entire bal down to 5%

Call them up- they will re-open it

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PKMG wrote:

Timothy:

Thanks for all the help. 

 One more dumb question, you said you do 5% util to save room for finance charges.  Does this mean that when I put 5% on my card that I must take the finance charges to get the util out of it?  I have always been putting 1%-9% on my cards and paying them back in the grace period.  Am I doing this wrong?

Also I didn't use my store card for over a year and now my CR says the account is closed / inactive.  I'm guessing that's the point of rotating cards to avoid cards being closed  

Can you actually reactivate a store card if they closed it due to inactivity?

Fused:

Thanks for the advise.  I read the credit 101 thread, and pretty much all of the recommended links, just need some clarification. 

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[Anonymous]

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PKMG wrote:

Ex: If I had the four cards at 1%+1%+1%+1% (total 4%) would that be any different than having 9%+9%+9%+9% (total 36%)?

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Percentages aren't always clear, particularly when talking about CCs. No one, outside of credit forums, ever talks about, "Yeah Fred, my Citibank VISA is up to 39% util, but my Chase MC is down to only 12% util."

Actually, this would be a rather interesting experiment in human psychology if the right opportunity presented itself. Mention util and CCs, and you'll likely get a dog-hearing-high-pitched-whistle cocked head and blank stare. But I digress.

If you have 4 CCs each at 1%, then your total util is also 1%. If you have 4 CCs each at 9%, then then your total util is also 9%. Percentages aren't cumulative.

CC1    $10     $1,000   1%

CC2    $20     $2,000   1%

CC3    $30     $3,000   1%

CC4    $40     $4,000   1%

All       $100   $10,000   1%

[Anonymous]

Exactly they aren't cumulative. Also, I agree you can reactivate you aren't getting points if your card is collecting dust try at min to use before 3 months of inactivity.