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Credit Cards (pg. 5)
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| gehzumteufel |
| quote: | Originally posted by lücid
i was always under the impression that you weren't supposed to cancel credit cards that no longer have a balance on them. i have quite a few that i haven't used in years that are still open, and now i'm reading from a few of you that you should have 2 or 3 cards open at most. currently i only keep a balance on 2 cards, but i have maybe 2 or 3 other ones that don't have any balance on them. what's my best option? keep them open or close them? |
this hurts you. why? too much credit availability. yes that is right. you can have TOO MUCH credit available to you. close 1 card every 6 months. dont close all at once. it hurts your score. |
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| Roweazie |
| quote: | Originally posted by lücid
i was always under the impression that you weren't supposed to cancel credit cards that no longer have a balance on them. i have quite a few that i haven't used in years that are still open, and now i'm reading from a few of you that you should have 2 or 3 cards open at most. currently i only keep a balance on 2 cards, but i have maybe 2 or 3 other ones that don't have any balance on them. what's my best option? keep them open or close them? |
Open cc and not being used is consider as adverse acct. |
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| Roweazie |
| quote: | Originally posted by JD8180
i think you're supposed to close them. i think having credit cards at a 0 balance just lowers your score. :( |
no, its the activity. |
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| JD8180 |
| i love how TA is a source for credit counseling. :tongue2 |
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| lücid |
| quote: | Originally posted by gehzumteufel
this hurts you. why? too much credit availability. yes that is right. you can have TOO MUCH credit available to you. close 1 card every 6 months. dont close all at once. it hurts your score. |
how can one have too much credit? i thought a large part of your credit score was based on your debt to credit ratio. |
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| gehzumteufel |
| quote: | Originally posted by ********
I'm not sure what you are refering to with the RFID stuff.. the CHIPCARD has a microchip in it so it is has an encrpyed code in it that just cant be swiped. also the authorization code is needed for all purchases sort of like a debit card.
http://www4.bmo.com/bmo/portal/cda/...9494974,00.html |
sorry i didnt know it was a smart-card enabled card. the "microchip" is eactly the same thing as a SIM card in a slightly different application. these are very secury.
but the ones you can wave across avoid. these have 0 security. and even if they do employ security, the security is broken in a snap. its like having just a single guard to keep a massive open safe devoid of thieves. yeah right. aint happening. same thing.
here is the example of the card being read with very cheap means, but the reader range can be enhanced with more expensive readers and more powerful antennae. |
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| gehzumteufel |
| quote: | Originally posted by lücid
how can one have too much credit? i thought a large part of your credit score was based on your debt to credit ratio. |
most of your ratio is determined by DTI (Debt To Income) ratio and then they consider your total available credit and how much is currently used, and also your liabilities.
edit//oh and your liquid assets.
edit2//also the reason you can have "too much credit" is in reference to credit availability. so if you have 2 cards that have the AVAILABLE credit of 100k, and you want a loan for 200k, but your income doesn't support a payment on 2 cards that COULD total 100k and a mortgage payment for a 200k loan plus all your liabilities, you can and quite possibly will get denied for the loan. the potential risk is VERY high in their eyes. it can happen with a car loan too but that's considerably less likely for a small car loan. |
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| Roweazie |
| quote: | Originally posted by lücid
how can one have too much credit? i thought a large part of your credit score was based on your debt to credit ratio. |
nope, its actually activities of your credit, type of credit, and inquiries (inquiry is activity of your credit grantor, or allowing credit grantor to check your credit, and promotional credit). |
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| gehzumteufel |
| quote: | Originally posted by Roweazie
nope, its actually activities of your credit, type of credit, and inquiries (inquiry is activity of your credit grantor, or allowing credit grantor to check your credit, and promotional credit). |
wrong. a large part of your FICO and BEACON score is related to your DTI (which factors in debt to credit ratio also) |
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| Roweazie |
| quote: | Originally posted by gehzumteufel
wrong. a large part of your FICO and BEACON score is related to your DTI (which factors in debt to credit ratio also) |
thats my point of view from all three credit bureau. Thats what matter to increase fico/beacon score. |
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| gehzumteufel |
| quote: | Originally posted by Roweazie
thats my point of view from all three credit bureau. Thats what matter to increase fico/beacon score. |
i was in the mortgage industry 2 years ago (thank god not a loan officer) and credit was one thing i asked the loan officers and the processors a LOT about. how different things affected the credit score, best practices with regards to opening and closing cards, DTI info, best ways to improve the credit rating, and ways to improve my credit worthiness. factors that seemed to always come up were liabilities, DTI, and liquid assets. your spending habits were key in keeping everything in check. they also said to create a savings account to put the money you would have spent on that piece of whatever, and while im building credit to keep the balance low. nothing ever over 50% and preferably lower than 25% as you suggested. your credit activity only shows 1 thing. you know how to spend. it doesn't show else that they look for. they are watching payment intervals, amount of payment and DTI. 3 major things that factor into how they decide to lower your interest rate and jack up your credit limit. |
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| Alex |
| quote: | Originally posted by gehzumteufel
thats not really that true. the reason being is that once the loan is paid off, its done. it doesnt effect your credit rating anymore. this is why a revolving balance on a credit card, even if its just $100-200 every month, actually does improve your credit rating.
umair: did you cancel that card!? if not, you better call right away. not using a card doesnt cancel it. most companies will leave it open for years in hopes you will use it. |
Sorry, I forgot to mention.
The idea is that you keep taking out loans one after the other until you have a solid credit history.
I learned about this in economics actually, in Canada personal loans hold more weight with your credit score than credit cards apparently, which makes this solution (in combination with a credit card if you REALLY want) ideal for building up credit history FAST. |
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