Is it a good idea to open a secure credit card while still have delinquent accounts in my credit report?

Question

I opened a secure credit card about a month ago to improve my credit, but I still have 2 delinquent acounts open that supposely will be erased in 1 year (they are from 1998) from my credit report. should I keed the credit card or should I cancel it?

Answer 1

Yes, it is good to have opened a secured credit card account. Do NOT close the secured credit card account. Good for you for taking a step in the right direction: you're establishing good credit history for yourself!

First, it is a myth that you need to carry a balance - and thus pay finance charges - to improve your score at the fastest rate. 35% of your score is for payment history. You can score max FICO points by making a small, NECESSARY purchase once a month on each card and paying the card off in full every month, always on time. Post-delinquency, you want to show a mortgage lender that you don't need credit for anything except a mortgage loan. Change your lifestyle so that you don't need to carry balances.

You can get a free copy of your credit report from each of the 3 major credit reporting agencies (CRAs), once per year, at www.annualcreditreport.com. Look at your TransUnion credit report. It reports up to 48 consecutive months of activity, month-by-month, in a little box. Your goal is to produce a string of 48 consecutive boxes having OK in them, on every account, no finance charges. That will be a beautiful sight to a mortgage lender.

30% of your score is credit utilization: how much of your credit limit is used up by your balance? You need to keep your balance below 30% of your credit limit, or you will hurt your FICO score. For example, if you have an $800 credit limit, you must not have a balance higher than $240, which is 30% of $800.

If your credit cards are secured, you can just pay the start-up fees the first month. After 6 consecutive ontime payments-in-full for 6 consecutive months, ask to have your card converted to unsecured, have your security deposit returned with interest, and have your annual fee waived. If the company refuses, try again at 9 months and 12 months. The company may convert you to unsecured automatically. If your card goes unsecured and you have no more fees charged to it, leave it open. 15% of your FICO score is for length of credit history. The average credit user has an oldest open account
that has been open for 14 years. They also score you on the average length of time all your open accounts have been open.

You cannot improve your score by closing credit card accounts; you can only hurt your score. Just don't pay money to keep the account open (i.e., an annual fee).

Having something on your credit report since 1998 is unusual. It had better be a Chapter 7 bankruptcy, a tax lien, or a judgment won against you in court. If it's simply a debt, it must be removed after 7 years, that is 7 years after the original creditor charged it off. Re-aging the debt is illegal.

Please vote: Did this help?

Answer 2

Half of credit repair is rebuilding your credit - keep the card.

What kind of delinquent accounts do you have that are remaining on your reports for that long?

Answer 3

No keep it up and try to buy more and pay the bills with that credit cards to improve your credit.
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