I have 5 store cards: Target, Fbug, Sears, Buy and Dillards. I have 4 CC: Providian, NextCard, Capital One, and First SD. That's 8 accounts total with a credit potential of $14000. I make $28000 a year. Is this too many cards and too much "potential debt"??? The only reason I'm keeping most of them is b/c they date back to 1995 when I first started establishing credit. i'm afraid if I close my old trade lines it will lower my score. What you fools think?
Well, if you work out your possible debt to income ratio, you could owe 50% of your yearly income. You should probably go pay a few bucks to get you FICO score (I think you can get it free at E-Loan.com).If you get the complete FICO report, and you have a low score, they will tell you what the primary reasons were, eg you had too many revolving account open, or you have too much available credit, etc.Dave
I have 5 store cards: Target, Fbug, Sears, Buy and Dillards. I have 4 CC: Providian, NextCard, Capital One, and First SD. That's 8 accounts total with a credit potential of $14000. I make $28000 a year. Is this too many cards and too much "potential debt"??? The only reason I'm keeping most of them is b/c they date back to 1995 when I first started establishing credit. i'm afraid if I close my old trade lines it will lower my score. What you fools think? Hi jfpruitt,You've got far too many cards, Fool! Having this many is just more to have to keep track of, as well as giving you a credit line that could work against you should you need to go for a loan.If you use those store cards, you're going to get zapped with very high interest payments unless you pay in full. You don't need these, as any major credit card will work in those stores.As far as the others, I'd limit it to 2 major cards--one for your primary use, and one for an emergency back up.Tony...but I still am...Off2ArubaHave questions about saving, spending and investing? Get the answers in TheMotley Fool Money Guide!!http://www.foolmart.com/Shopping/Product_View.asp?PRODUCT_ID=MF031_02&REF=CBO03123
I wouldn't close all of them but I would close most of them. Your credit score is only half of the picture, and will probably be improved by closing at least the store cards. Keep your oldest account open. Also remember that even though an account is closed it remains on your credit report and still contributes to the length of your credit history.The second half of the picture is how lenders view that many open revolving accounts. According to my mother, who is a loan processor, the more accounts you have open the less favorably you are viewed. It's not just a matter of the balance you have on those cards either. For every card that has a balance of 0 the bank where my mother works will determine that's an additional $25.00 per month that you are paying toward debt since the potential exists for you to charge.In your case, the bank would add $200 of monthly debt to your debt to income ratio since you have eight cards, even if you had no monthly balance ever on any of those cards. Given your income of $28,000, that will likely lower the amount you could borrow for a mortgage. It will also likely increase the percentage rate you will be paying. Borrowers with a high debt to income ratio will not receive the best loans even if their credit score is excellent.
Well the reason I ask is because I recently paid off all these cards and want to increase my score. I was told that 5 cards total is a prime number to have. Not sure if this is true though.
Is Buy = Best Buy?I assume that it is. I would keep this card just because of the amazing deals you can get with no interest. Instead of forking out $1200 for a new washer/dryer, I can pay $67 dollars a month for the next 18 months, keep the $1200 in my efund, and pay the exact same price.
You've got far too many cards, Fool! This made me laugh SO hard. Before everyone jumps on me, let me tell you I am in the process of closing the majority of these accounts and I have never been late with a payment and pay all of my balances off each month. The current balance I am running TOTAL of all these cards is about $850.00.My credit card list:AOL Visa (First USA), First USA Mastercard, Juniper Mastercard, Discover Card, Citibank Visa, Fleet Mastercard, Chase Mastercard, First National Bank of Omaha MastercardStore Cards:Best Buy, Hecht's, Macy's, Wal-Mart, Victoria's Secret, SearsThe total of all my credit limits is approximately 65,500.00. My score according to e-loan is 758. How insane is that!!
That looks like 9 cards to me, but whatever. =) I don't think having six old accounts is twice as good as only having three, and the more open accounts you have, the more opportunities someone has to make fraudulent charges. (Or just flat-out mistakes. One of my colleagues argued for MONTHS with his credit card bank over a bogus charge, and it turns out the merchant was keying in the credit card number, transposed two digits, and it landed on his card instead of where it was supposed to go.)I would say cut out two CC's and two store cards. Cut out the CC's with the highest interest rate, or the ones with the highest limits if they're all about the same. Cut out whichever store cards you use least frequently. Some folks may have opinions on which particular stores' cards are evil and should be destroyed on sight, but I would be mostly concerned about trimming away inactive accounts because that'll make the least negative impact on your life. - Kilbia
If you have paid them all off I would close all the department store cards and all but two of the major credit cards. The criteria for which of the major credit cards to close is highly dependent on your circumstances, but I would stick with the ones that have the lowest interest rates and fees.
<<i'm afraid if I close my old trade lines it will lower my score. What you fools think?>>Do you have any nasties on your report now (deliquencies, tardiness)? If not, then don't even worry about your FICO score. Why let a bunch of boneheads influence your decision, as long as you know you are behaving responsibly?Some will take me to task on this, but I believe that the FICO score is justification #112 of "Why I HAVE to have CC's." This although, should not be the reason that you get rid of your store cards. To me, store cards are useless, unless you really like to pay higher than normal interest rates.I went through the period in my life a few years ago where I would sign up for a store card just for a discount and decided that if I wanted to pay for it on MC or VISA it was just the same. It also makes sitting on my wallet more comfortable. I did have someone charge something on my Sears card, so, yes, that can happen too (especially at Sears where they have been known to run a charge without a card).Bottom-line is if you use your cards responsibly or not at all, and you are applying for something well within your means, your banker is being a major league bonehead if they deny you based solely on your FICO score. And you don't need to pay interest to boneheads. Shop around for banks with brains.Fred
Get rid of your store cards. If there's anything there you really want to buy, you can get them on your "regular" cards. Write and cancell all of them. Get rid of all but two of your other cards. Pick the two with the lowest rate, or pick one MasterCard and one VISA.Your credit will be *best* if you have only a few cards, pay off the balances each month, don't have any late payments or missed payments, and otherwise have an exemplary payment record. With a salary of only $28,000/year, $14,000 is WAY too much credit. Should you try to get a mortgage, it's likely you'd be denied.
Look at the store cards and determine if you get a benefit specifically from using that card, or if a Visa or Mastercard will suffice. IMHO, the Target card is an example of a card that really doesn't offer any perk to using their card as opposed to a MC or Visa. If you don't spend enough in Sears ($600/yr) to qualify for their "Premier" then it's not worth using the Sears card either. I might keep a card like the Best Buy card because it's nearly always 90 days same as cash, but could end up being 12-18 months interest free on purchases. That's a nice perk.As for the 4 MC/Visa cards, do any charge an annual fee? Do any offer rewards or benefits for using them? Even though you've had the accounts for a long time, if the card doesn't offer anything special why carry it?As for too many, the effect on your score is not the end of the world. If you're not shopping for credit cards anyway, then the score doesn't matter.- Lan
Try to postpone closing the victoria secret card for a while if you can. poor millenium already has had that one taken away from him. :-) If you could just keep it open a little longer as tribute.Mike
I have 5 store cards: Target, Fbug, Sears, Buy and Dillards. I have 4 CC: Providian, NextCard, Capital One, and First SD. That's 8 accounts total with a credit potential of $14000. I make $28000 a year. Is this too many cards and too much "potential debt"??? The only reason I'm keeping most of them is b/c they date back to 1995 when I first started establishing credit. i'm afraid if I close my old trade lines it will lower my score. What you fools think? This is a very significant amount of personal debt. I would start out by closing the store cards, possibly with the exception of Best Buy (if you actually use it).As for the other major CC's, you need to consider who you have the best relationship with, most favorable rates, and longest history. Consider this all as group (ie: don't keep your 'oldest' card if they treat you horribly).Closing accounts will have a minimal impact on your credit, if you don't have significant balances on any of them. It will have a much larger impact if you DO have large balances. However, paying those balances down will reverse most of the negative consequences, as will waiting a few months for your score to settle.There are mysterious, not-quite-clear ways to 'tweak' your credit score. However, to get into a range that is "good enough" to get favorable borrowing rates (CC's, vehicle loans, and mortgages), all you need to do is have a couple cards and pay your bills on time, *every* time. Establish a record of that over many years, and lenders will love you!Gwen
Everyone offered good advice about trimming down the number of cards. I would especially get rid of the store cards. There is also another option no one mentioned and that is to call the CC companies and tell them to reduce your credit line. ie. if your Visa has a cl of $8000 and you never break the $2000 barrier then have the cl reduced to $5000. You can always increase if you need it in the future.
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