Credit Cards

[DCLonghorn]

I know that some of you guys are in the financial industry so I have 2 questions. I presently have 5 credit cards, 3 department store and 2 Mastercards. I only carry a balance on 1 of the Mastercards, less than 30% of the limit. 1) If I were to close the department store credit cards, how would this effect my credit rating? I have had the department store credit cards for more than 10 years; and 2) how does not carrying a balance on the cards, paying off each month, effect my credit rating? I am asking because I keep hearing conflicting information. One day I hear that it is bad to close accounts that have been open for a long period of time because it shows a history. Another day I hear that they should be closed because they are not being used and that looks as bad as having a high balance. Thanks.

 

[misterpink]

Close the cards you are not using, except maybe one retail and one Master card. The more outstanding credit you have the more creditors think you can go out and run up if you want. That is a credit risk. It may not effect you getting an installment loan, but any applying for lines or homes will be difficult. This should also improve your rating dramatically by closing a few of your lines.

 

[Engelke]

wrong, wrong, wrong........go to myfico.com. There is a section there about ways to raise your credit scores and common myths (like the one above) about how to raise your scores. Everythign you need to know is there, most people think closing lines of credit not currently in use helps your score, but depending upon your situation they may be HELPING your score.

They report as "paid as agreed" every month. All the bureau knows is that balances are paid by the due date each month. It makes no difference if you but 1000 bucks worth of stuff and pat it off in the same month or if you buy nothing and therefore, have no payment due.

Credit scores are based on # of trade lines, payment history, account balances in relation to credit limits, and length of credit history

 

[PureTexan]

It doesn't hurt your chances of getting a home loan unless you have a balance and aren't paying. If you pay on time or carry zero balance, you're not hurting yourself - mortgage companies don't care unless it jerks up your debt to income ratio.

 

[conVINCEd]

Just to echo the above, credit received and used resposnibly is a good thing. If you had 6 credit cards, a card for every department store under the sun, 2 car loans, 5 gas cards, and 3 or 4 accounts from furniture stores are on installlment plans, this would be a different story. You may laugh, but this happens more often than you would think. if you are not carrying balances and have not had late payments, it should not be a problem at all.