Fashion

[LTT1]

On 1/3/2015 sgraham30 said:

On 1/1/2015 happy housewife said:

On 1/1/2015 ibb38 said:

On 1/1/2015 sgraham30 said:

I keep them & just don't use them.After a specific period of time that the card isn't used, the retailer will cancel the card for non-use.

Exactly! I was just about to post this--

Visa , mastercard etc do not do that.

I'm referring to store cards such as the Angels card (Victoria's Secret), the Penney's card, Sears card, Kohl's card, etc.

Our un-activated bank card account was closed. We didn't activate it for a very long time. It was either a Mastercard or a Visa.

[LTT1]

On 1/3/2015 LuvitorLIT said:

I am working towards closing the highest interest cards first but in reality you have to have at least one credit card to use for travel and other types of purchases.

I heard that you shouldn't cancel credit cards because of the negative effect on your credit score which makes no sense. Banks only smile when consumers are in debt for obvious reasons, but if there is a credit card I no longer need or use why keep it?

Banks do indeed smile at those in debt using their cards... there is a free DVD rental called "Maxxed Out" which explains a lot about the politics of banks, etc, and consumer debt. It was all the way back in WWII era that the treasurer of the US stated that "the only way to win at the game is to be the last person holding the cards"... (the last one holding the money). I love this way of thinking. People used to think that institutions would not grant them credit if they weren't worthy... and so not true!

[febe1]

It will lower your credit rating if you close it out. Just don't use it.

[scotnovel]

On 1/1/2015 Tique said:

This is something I know a little about. I have four credit cards that I rarely use; however, I know that if I close them it will affect my credit rating. It's easier to explain using real numbers. If you have ten credit cards and all of them have a limit of $1,000 you have a total credit line of $10,000. If you close four, your credit line decreases from $10K to $6K. Potential creditors don't look at why but what so all they will see is that you loss $4k of credit worthiness. If for whatever reason you just have to get rid of those cards, do it slowly. Going from 10K to 9K is not significant but even that will affect your credit score for a minimum of six months.

Those four cards that I would like to close all have very high limits so I use them each once a year on something less than $50. I pay the charge immediately - even before the bill arrives. I keep a list of when I last used a card so that when I have a minimal purchase, I can look at the list to see if it's time to use one of those four cards. I only have one card that I keep a balance on. The reason I do is because when I owed nothing, my credit score started to drop. Creditors want you to have debt. Do it responsibly.

It has more to do with your debt to credit ratio versus the loss of, in your example, $4k of credit worthiness. For example, if the total you owe on all accounts is $2k and your total available is $10K your ratio is 20% ($2k debt divided by total available credit of $10K). If you close out $4k then your new debt to credit ratio is 33% ($2k over $6k available credit). The higher the debt to credit ratio, the lower your overall credit score. They do not take into account that you closed the accounts yourself.

[LTT1]

would it be true that a young person trying to establish a credit rating could charge a fast food meal costing $5 , go and pay it off in cash, and then have a favorable credit history?

Would this work?

[febe1]

Credit card companies do not expect you to use more than at the most 30% of your credit limit. Pay it off monthly for good credit history.

Yes, lovestoteach, that would be a good way to begin a good credit history. I think I would make it at least $20. though and pay it off monthly for about 6 months. They then should increase his/her credit limit.

[PamB226]

On 1/3/2015 taja123 said:

It will lower your credit rating if you close it out. Just don't use it.

One more time.....IT DOES NOT LOWER YOUR CREDIT RATING!

[PamB226]

On 1/3/2015 Scotnovel said:

On 1/1/2015 Tique said: <p style="font-size: 12.8000001907349px;">This is something I know a little about. I have four credit cards that I rarely use; however, I know that if I close them it will affect my credit rating. It's easier to explain using real numbers. If you have ten credit cards and all of them have a limit of $1,000 you have a total credit line of $10,000. If you close four, your credit line decreases from $10K to $6K. Potential creditors don't look at why but what so all they will see is that you loss $4k of credit worthiness. If for whatever reason you just have to get rid of those cards, do it slowly. Going from 10K to 9K is not significant but even that will affect your credit score for a minimum of six months. <p style="font-size: 12.8000001907349px;">Those four cards that I would like to close all have very high limits so I use them each once a year on something less than $50. I pay the charge immediately - even before the bill arrives. I keep a list of when I last used a card so that when I have a minimal purchase, I can look at the list to see if it's time to use one of those four cards. I only have one card that I keep a balance on. The reason I do is because when I owed nothing, my credit score started to drop. Creditors want you to have debt. Do it responsibly. <p style="font-size: 12.8000001907349px;">

It has more to do with your debt to credit ratio versus the loss of, in your example, $4k of credit worthiness. For example, if the total you owe on all accounts is $2k and your total available is $10K your ratio is 20% ($2k debt divided by total available credit of $10K). If you close out $4k then your new debt to credit ratio is 33% ($2k over $6k available credit). The higher the debt to credit ratio, the lower your overall credit score. They do not take into account that you closed the accounts yourself.

It's NOT your "debt to credit ratio", it's your "debt to income ratio" that impacts your credit score, especially when it comes to home loans, car loans, etc., which is the only reason we need to care about our credit scores