Credit Card Programs - just got my credit report...
Sep 5, 06, 9:58 pm
and it's good, no late payments at all, long history of credit. Almost no debt. What can I do to maximize my score? I have some department store/ American Express cards that I haven't used in about five years. Should I close them out? I heard that if you have too much available credit it isn't good, but having long standing accounts is. I have seven accounts with a total credit line of $23,500 and am a young (well, relatively ;) ) professional.
Probably not much to worry about, but might purchase my first house and a new car within several years and want to maximize my score....
Sep 6, 06, 12:31 am
just my advice (and it's likely worth exactly what you are paying for it :D ),
actually start to use your five year old accts that you say are dormant.
Do you still have Valid Cards for these accts? Just because the accts appear on your C.R. does not mean that the account is active and good to go. The last thing you want are hard credit inquiries from creditors that you have really old accts.
Take one of your five year old dept store cards and make a small purchase for something you need . Say $80-. When you get the bill don't pay it all at once.
pay $20 a month for 4 months. This will help your score.
Sep 6, 06, 2:40 am
Stop, writetorich, sorry to say is totally wrong.
For more detailed answers you should head over to the forum section of a website such as creditboard.com
Some general rules are:
1. Don't close old accounts, especially your old one. I know your old one has the worst rates and no rewards but you just keep it open.
2. It's an old wives tale. The thing about spending money on a credit card and not paying it off all at once and paying interest on it and thus building your credit is pure bull crap. That's not how credit scoring works. You don't need to pay interest to build credit. The thing is either with a 0 balance and if you carry a balance both are reported the same to the credit agencies as a timely payment and not a late payment which is what counts. So don't pay interest for no reason at all unless you can't afford the bill right now.
3. At 23,500 you don't have much unsecured credit, it's pretty low especially across 7 accounts. You should start increasing them little by little over time. Some credit cards such as citibank, you can request an increase online about once a year without them having to pull a hard credit report.
The main thing to improve credit is to have a low debt to credit ratio, which is utilization. If you used 90% of your credit, your score will be crap, if you use less than 20% of your available credit your credit will be better, the less the better.
From personal experience, after I bought my first car and financed it with a super low rate of 2.9%, my credit score went through the roof. It's the timely payments, long credit history, and low utilization, ie low debt that makes good credit.
So no need to pay useless interest thinking it will help.
It looks like from what you said, you should have a decent score, when you buy a car in the future, you should be able to get a good loan from places like eloan.com or a credit union, instead of being at the mercy of the car dealer.
If you ARE going to close out accounts the ones to close are the department store or gas card lines.
But generally speaking you don't want to close accounts unless they carry a fee. Very little harm in open lines of credit. Lots of credit cards won't generally hurt your score. It's possible a mortgage lender will decide you have too much available credit (honestly not a common thing AFAIK) and in that case you can close them. But you want (1) long-standing credit lines and (2) unutilized available credit...
Sep 6, 06, 1:23 pm
Thanks to all that replied. I have never carried a balance and rarely use more than $1500 of my available credit. My credit report showed I owe a whopping $430, so my ratio is about 1.8%.
I do have a question- my NWA visa raised my credit limit. I phoned them and asked them decrease it because I said I'm not a heavy spender and pay all of my bills off in full every month, and that I was worried about fraud. Should I have kept my limit high, I can always phone them to increase it. The consensus seems to be that a lot of unused credit is good.
What about a overdraft protection line of credit from a checking account? I had $3000 line of credit for overdrafts (which would never happen to me) and closed it (again worried about fraud), it shows up on closed on my report.
How many credit inquiries is too many? It sounds like it would be OK for me to get more available credit, I want to sign up for the AA visa to get 20,000 miles, then the SPG AMEX and CO Mastercard.
moolman- when you said your score went through the room, I assume you mean it went higher (more favorable to you)?
just got my credit report... and it's good
If it's good, then don't sweat it. Just avoid doing anything stupid to damage your credit and you should be fine. It's not like there's a continuous function where for every point on your credit score you get a slightly better interest rate. You just need to be above threshold.
Since in general having long-lived, under-utilized, high credit lines is good for your credit score, often the best thing to do for your credit score is literally nothing. Don't go around opening and closing credit cards, don't ask to have your credit limits reduced, don't ask to have your credit limits increased if it results in a hard pull, don't disable whatever credit line came with your checking account, and just generally don't worry about credit if you are living within your means.
If you are really concerned about fraud, maybe you can subscribe to one of those credit monitoring services. It will cost you a few dollars a month, but if it helps you sleep better at night, may be worth it.
Sep 6, 06, 9:28 pm
Some hints - some based on personal experience and some based on some info that the credit agencies used to send out with their reports:
Don't miss a payment - in terms of a credit report, it is better to pay the minimum on something on time vs. sayng I'll just pay the whole thing next month. 3 missed payments in a row on an account is a much bigger hit.
You do want to occasionally use the dormant cards.
Too many or two few cards will hurt. I had eight active a few years ago and the computer report said that was a good number.
If you close an account, make sure that it shows up as closed on a future report and as "closed at consumer's request" - keep an eye on future reports if a closed report shows up as open again.
Older accounts are better than newer accounts, especially with credit cards
There is a small negative if you use more than 20% of the credit limit on a card, then a much bigger hit if you go over 50%. Translation: normally take the increase in credit line (although too much can also hurt).
Don't do a lot of credit card shopping, generating credit inquiries. If you shop for multiple cards at the same time, they don't know if you are trying to set up the best deals (points, miles) or are getting into financial difficulties
A lot of credit inquiries at the same time for something like a car loan is not a problem - many dealers will run a credit check while you are still talking or thinking. They recognize that if they get a lot of car queries within a few days.
Other comments: don't be surprised if a store or gas card unused for 4-5 years is denied even if you still have the card and the report shows it to be active.
You can prevent fraud by checking your account balances on-line, for free, on a regular basis. I probably look at each of mine at least once a week, my checking account a little more frequently - doesn't cost me anything and I have headed off what may have been some fraud very early in the game (you can also protest on-line)
Sep 7, 06, 11:57 am
Thanks to everyone for their help, especially exiled2x, your post has a lot of useful info. ftweb might be right in that I worry a bit too much, but if you read this article you will worry too: