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TammyB

Credit report question

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Tammy I never had bad credit but I did have a lot of zero balance cards that I opened to help pay for law school related costs. I ended up closing most of them thinking the same rationale as you. Well it turns out that was a bad move. Everytime you close a card your credit drops. I'm not sure why. The reality is that you should just leave it open and let it be. It might actually hurt you more to close them than to just leave them open.

 

I wish someone would teach a class on this to young kids in highschool or college. Really the best thing to do is to open a few respected credit cards (like 3 or 4) and not more than that. And you should open them as early as possible so that you can have long standing credit. Even if you don't use them every month, you should put at least one bill on it (like say a phone bill) so that the credit is being used. This is the best way to have excellent credit.

 

The problem is that people like you and I opened up too many zero balance accounts and even if we pay them on time it does affect our credit b/c we have too much open credit, in the sense that we can get ourselves in trouble.

 

I would keep them open if I were you. I would not close them b/c your credit is going to drop a little.

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I'm not an expert, but I think that paying ALL of your bills on time, every months, for years on end, will have more of an effect on your credit score than if you have 40K available credit versus $50K. Why not pare down to about half as many cards, and you'll still have plenty of long-standing relationship ones for your credit score. I know I might be going against the grain, but I just don't think it will make or break your credit worthiness in the future.

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As counter intuitive as it seems, you are better off leaving them open. You credit score looks at many things, but one of the biggies is % used of available credit - the more avail credit you show, the better off you are.

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Quote:
Originally Posted by Janet View Post
I'm not an expert, but I think that paying ALL of your bills on time, every months, for years on end, will have more of an effect on your credit score than if you have 40K available credit versus $50K. Why not pare down to about half as many cards, and you'll still have plenty of long-standing relationship ones for your credit score. I know I might be going against the grain, but I just don't think it will make or break your credit worthiness in the future.
That's what I was going to say, the big factor is your actual credit history of paying off any debt. I think the open cards may impact slightly, but not enough to worry about it too much. Again - not a professional here! lol

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Just make sure you use them every once in awhile tho even if you pay them off the next month. The reason I say this is because I had a Penney's card in my early 20's---- I used it a couple times, then didn't use it for several years.... well, Penney's closed the account since I wasn't using it, and it wound up dinging my credit report. Credit bureau's don't like it when creditors close the accounts.

 

Also, I had a Target card years ago and again, didn't use it often. Then, I went to Target one day, decided to use the card but didn't have it on me. So the service desk "looked up" the card for me to use. What I found out later, was that they couldn't find my original card number and they just opened a new (second) account.

 

Granted, my original Target card was opened prior to Clinton's administration pushing the availability of the internet, so a lot of business'es were really just getting their accounting systems computerized. Hopefully that kind of stuff doesn't happen much anymore. But at the time, it dinged me and to this day, my credit report shows 2 Target accounts but Target has never been able to locate my original account number in their computer systems.

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Originally Posted by TammyB View Post
Thanks Jess.. :-)

I think most if not all my cards have been open for awhile now. So when does too much credit effect your score? So say I have 50k in open credit but I make say 60k a year, wouldn't that be bad for your credit report?
I think the difference is that leaving them open helps your FICO score. But, some banks might look at it & say you have too much available credit. You are still better off with a higher fico.

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If you do decide to close any, do them 1 at a time--no more than 1 per year. That's what I was told. Everytime someone looks at your credit report it goes against you and when you close an account I guess they look up your credit score. (They also do this when they review your interest rates.) The same goes if you are trying to open a new account. You should apply for one card then wait and see what happens, don't apply for 3 in one day and pick which one answers you first

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Tammy ~ Your credit score has absolutely nothing to do with how much money you make. The credit bureaus don't have your income information.

 

Also, along the lines of what Maria said, do make sure you use your credit (not necessarily every card...I only use one credit card and have really great FICOs)...I had a guy who applied for a loan and he had 2 credit cards and an old car loan...he hadn't used either of the credit cards in over 6 months, so the bureaus couldn't generate a credit score for him because they didn't have enough recent payment history.....he showed me an old credit report with his score (ran a few months prior) and he had FICOs over 700.

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Originally Posted by chprfan View Post
I don't mean to hijack this thread...but what is a "good" credit score to have when you going looking at getting approved for a mortgage these days? hijacked.gif
680 or above can get you financed on just about any mtg. program

To get the best rates out there 700 or above

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