Credit

[Alan]

Time for my random question of the month ...

Does anyone know much about credit reports? My score is considered "good" but I have a lot of revolving accounts that are open. Is there any negative to closing the accounts I don't use anymore? Or do I need to keep them open (all are in good standing) for a certain amount of time?

 

[Divide Et Impera]

I deal in credit all day, every day. Keep your accounts open, but keep 'em LOW. Keep your revolving accounts under 30%. So, if you have a $1000 credit card, keep the balance at $300 or lower. All my revolving accounts are at $0 personally, but I've had tehm for 4+ years. Even if your balance is $0, you still get monthly credit for good account history....

 

[Jersey Girl]

Time for my random question of the month ...

Does anyone know much about credit reports? My score is considered "good" but I have a lot of revolving accounts that are open. Is there any negative to closing the accounts I don't use anymore? Or do I need to keep them open (all are in good standing) for a certain amount of time?

Everything I've heard says to keep them open. More credit it better than less credit, especially if you're looking to buy a house (at least that's what I was told). Closing many accounts all at once can be viewed negatively.

 

[Alan]

Great. Most of my accounts are at $0. I think the problem is most have been open under 3 years - since I am a youngling.

 

[Brian in Mesa]

Don't go out and borrow a bunch of money or keep balances to "build" credit. You only need credit if you plan on going even deeper into debt.

Just buy stuff you can actually afford to pay for up front, with the exception of a house.

For that - just be able to show you've worked the same job, paid your rent on time, paid your utilities on time, etc.

Credit sucks. Cash is king.



BIM

 

[DutchmanAZ]

Don't go out and borrow a bunch of money or keep balances to "build" credit. You only need credit if you plan on going even deeper into debt.

Just buy stuff you can actually afford to pay for up front, with the exception of a house.

For that - just be able to show you've worked the same job, paid your rent on time, paid your utilities on time, etc.

Credit sucks. Cash is king.



BIM

 

[Divide Et Impera]

Don't go out and borrow a bunch of money or keep balances to "build" credit. You only need credit if you plan on going even deeper into debt.

Just buy stuff you can actually afford to pay for up front, with the exception of a house.

For that - just be able to show you've worked the same job, paid your rent on time, paid your utilities on time, etc.

Credit sucks. Cash is king.



BIM

The best prime loans with the lower rates come when you have open and active tradelines with a good debt to balance ratio, good debt to income ratio and a good credit score. It's a good thing to have those open $0 balance accounts, especially when they go over 24 months....

 

[Cardinals.Ken]

Dealing with credit, and credit ratings everyday, I agree with DEI.

But on a personal note, I agree with BIM. With the exception of the house, I don't owe anyone anything! It's a good feeling after all the credit problems I've had in the past.

 

[Brian in Mesa]

The best prime loans with the lower rates come when you have open and active tradelines with a good debt to balance ratio, good debt to income ratio and a good credit score. It's a good thing to have those open $0 balance accounts, especially when they go over 24 months....

I already covered this:

You only need credit if you plan on going even deeper into debt.

 

[Brian in Mesa]

But on a personal note, I agree with BIM. With the exception of the house, I don't owe anyone anything! It's a good feeling after all the credit problems I've had in the past.

Congrats, man !!

It's a great feeling, eh?

 

[jw7]

Don't go out and borrow a bunch of money or keep balances to "build" credit. You only need credit if you plan on going even deeper into debt.

Just buy stuff you can actually afford to pay for up front, with the exception of a house.

For that - just be able to show you've worked the same job, paid your rent on time, paid your utilities on time, etc.

BIM

I agree with BIM on this one. Trying to keep accounts open for a great credit rating is overrated. I've only used 1 credit card since I was 22 that I have paid off every month and had no problem getting a mortgage with that limited history.

IMO there are only a few things worth going into debt for:

1) A house - since it is an appreciating asset and the mortgage interest is tax deductible.

2) Student loans - IF they will get you a significant bump in salary upon graduation. Borrowing $80K to go to MIT for an engineering grad degree is OK if you are going to end up making $40K or more per year. Borrowing $50K for a grad degree in English from UCLA might not make much money sense. In either case, upon graduation, live beneath your means and wipe out that debt, pronto. I went $30K in debt for my MBA with a 30K increase in salary and scrubbed it clean within 2 years, so I don't have that hanging over my head.

3) A car. Ideally, you should make every effort to pay cash for a used one. But everyone needs a car. In any case, don't get an expensive one and pay the balance down faster than the value of the car depreciates.

The one area where BIM and I disagree is that I think you should have 1 credit card - so long as it is paid off every month. I prefer Discover, some prefer airline miles cards. Especially if you have employer reimbursed travel expenses. I get a nice cashback bonus every year, 1/2 of which I did not pay for.