I heard somewhere that some credit cards can damage your credit even if you pay on time and more than the minimum balance. Is this true? What kind of credit cards would be like this? Thanks for your help!
2006-07-01 07:02:09 · 5 answers · asked by DustInCarroll 4 in Business & Finance ➔ Credit
yes. Credit cards with no limit can damage your credit score. 30% of your credit score is something called "credit utilization" which is the ratio of a cardholder's actual debt to his or her potential debt. According to bankrate.com, if your have a credit card with $10,000 credit limit and a $5,000 balance, the credit utilization is 50 percent. The lower your credit utilization the better your score. Therefore, if the card has no limit, the credit-scoring company can't make the credit-utilization calculation, and that has an impact on credit scores.
2006-07-01 07:11:10 · answer #1 · answered by leckscheid 3 · 1⤊ 1⤋
Usually the ones that can damage your credit, if you pay in full and on time, are the companies that want your interest dollars.
They may do a credit line decrease or simply close your account. Both of which will damage your credit How much it hurts depends on how old the account is.
There is one company, Capital One, that will damage your credit simply by the way they report. They do not report your credit limit. They only report your balances.
Which means that when you charge on your Cap One card, you look like you have 100% utilization on that account.
Cap One isn't the only one who does this, unfortunately, but is the largest credit company that does it.
2006-07-01 19:20:30 · answer #2 · answered by echo 7 · 0⤊ 0⤋
you are talking about two different things.....carrying and maintaining a high balance on any credit card will have a negative effect on your credit score...
There are types of credit that are considered "bottom feeder" credit cards....too many of these types of cards, even w/ zero balances can hurt your score...example: walmart credit, finger hut credit lines, some dept store cards, etc. I was told once that a Home Depot card is less than desireable, but I don't know that for sure.....I have a Home Depot card and use it all the time.
You want "quality" credit.
2006-07-01 18:29:44 · answer #3 · answered by Paula M 5 · 0⤊ 0⤋
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2006-07-01 14:40:45 · answer #4 · answered by Anonymous · 0⤊ 0⤋
There is some good info here.
2006-07-01 14:05:52 · answer #5 · answered by Anonymous · 0⤊ 0⤋