Credit Cards?? HELP!!!!!!! Okay, my fiance and I have a total of 12 credit cards between the both of us.. Our?

Question

limits are $300, $500, $750, $1,500, $1,750, $2,700, $6,000, $10,000 and $22,500..
We have Visas, Mastercards, American Express and two Store credit cards..
We are trying to pay them all off, and we are starting with the smallest ones and working our way up to paying off our bigger credit cards.. 12 cards is really too many for two people to have, don't y'all think?? None of the cards are defaulted or anything.. When we get some of those smaller cards paid off, do you think it'd be better for us to close some of those accounts down?? Or should we just pay them off and keep the accounts open?? We for sure want to keep our cards with the bigger limits.. What do y'all think??
Also, I'd appreciate any advice on how I can get our cards paid off FASTER!! We are trying to save up for a new car and a condo.. We are looking to buy within the next 2 to 3 years, so we do still have some time to work on improving our credit and paying off these cards.. Thanks a lot everyone!!

Answer 1

Improving your credit health takes time. Good for you for getting started 2 or more years before you plan to make a major purchase.

What will affect the interest rate on the new car and condo is your Fair Isaac Co (FICO) credit score. It is this score that you need to find out. And from the info you've reported, you can improve it.

First, go to http://www.annualcreditreport.com and get your free annual credit reports from each of the 3 Credit Reporting Agencies. Yours and your fiance's. Inspect them for incorrect information (merging of accounts with similarly named people, input errors, identity theft) and begin disputing the bad info. After that's cleaned up, go to http://www.myFICO.com and buy your genuine FICO scores. You'll then be able to assess what kind of interest rate you can expect.

12 cards are NOT too many cards for two people: it's 6 apiece, well within normal.

Do NOT close credit card accounts. Just pay them down to zero. Closing accounts can never improve your credit score.
Here's how open accounts having zero balances are definitely an asset to your FICO score:

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. So if you close those old accounts, you'll hurt your score because (1) you lose your oldest accounts and (2) the average age of your accounts goes down.

30% of your score is credit utilization: how much of your credit limit is used up by your balance? On each revolving account, you need to keep your balance below 30% of your credit limit, or you will hurt your FICO score. For example, if you have a $200 credit limit, you must not have a balance higher than $60, which is 30% of $200. So those old accounts will have a zero balance on them, and you can't get any better than 0% utilization. They also look at total utilization: they total up all your balances, and all your credit limits. That total percentage utilization must be kept below 30% of total credit limits, or you'll hurt your FICO score. Close those old paid off accounts, and you'll take away $0 in total balance, but you'll take away all those dollars in credit limits, and up goes your total utilization.

10% of your score is on credit mix. The good types of credit are mortgage, secured car installment loan, prime (unsecured) major credit card (MC, V, AmEx, Disc) and store cards (Macy's, Home Depot, etc.). The bad types of credit are payday loans, personal-finance loan accounts for purposes of cash advances, secured credit cards and overdraft loans. Ideally, you want to have at least one account for each of the good types of credit. Close the last account in one of the good types of credit, and down goes your score.

So what to do with cards to keep them open?

(1) Make a small, NECESSARY purchase on those old cards, and prove that you can pay them off in full. You are in danger of having those cards automatically closed for lack of use. You need to use them about once every 5-6 months to keep them open. It is NOT necessary to carry a balance and pay finance charges to score max points on the 35% of your score that is for payment history. To get max points at $0 finance charge, just make the small necessary charge every month (e.g., a utility bill on automatic payment, gasoline, groceries) and pay it off on time, every time.

(2) I've told you how to score max points with each individual account, but FICO not only scores individual accounts, it scores things in total and scores things that are averages. One of the things it scores is: How many open accounts have a balance on them that is more than zero? From everything I've read, you should not have more than about 6 - 8 accounts apiece that have a non-zero balance on them at any one moment in time. Too many non-zero balances will get you the "Too many accounts with balances" reason for FICO taking points off your score. See the full list of reasons at the source, below. (When you buy your scores, you should receive 4 reasons that your score isn't higher. The higher your score, the less important the reasons; the lower your score, the more serious the reasons.)

You'll improve your FICO score the quickest by figuring the current utilization percentage on each card (100 x current balance divided by credit limit) and paying down those cards with the highest utilization first. Pay each card's minimum to keep your excellent payment history, and pay extra on the
cards having the highest current utilization. Get the utilization down below 30% on each card, and you'll stop hurting your FICO score, and you'll raise your score by bringing your total utilization down, too.

Once your FICO scores get above 670, you should get flooded with pre-approved offers of more credit. This your signal to start trying to transfer balances to 0%-introductory rate cards, so that you'll spend less on interest and pay everything off faster. Watch the balance transfer fees and transfer no more than 30% of the new available credit limit to the new card.

Go to www.fha.gov and look for a First Time Home Buyers class in your area. Both of you take it, and save any certificate of completion. You'll be more informed and prepared when you first apply for that mortgage loan.

Read all the articles under each tab at www.myFICO.com to educate yourself further about the credit score game.

Now, there's one other big-picture issue to mention here: Are you tempted to abuse the open credit cards? If the answer is Yes, I suggest going online and finding 12-step recovery meetings of Shoppers (or Shopaholics) Anonymous, Debtors Anonymous, Gamblers Anonymous or Clutterrers Anonymous. They have in-person, conference-call and online chat meetings. You'll hear other people tell their story, and it'll sound just like your own.

Please vote: Did this help?

Answer 2

It is good to have a few credit cards (3-4) with one or two paid off. They will help your credit score by showing available credit.

Don't worry about the balance when you pay off your cards. Pay off the ones with the highest interest first!
Call your credit card companies and ask them for a better rate. If you are paying all of your balances on time, then you should be in the 12-14% rate at a maximum. If they won't give you the lower interest rate, move to the one that will.

Another thing you could do is re-finance altogether. Get a personal loan and pay off as much of your card as you can. The personal loan will have a set payment amount that you can budget for and you should get a better % than a card will give you (9-10%), depending on your credit score.

Here is the important part - SET A BUDGET no matter what you do. If you are putting as much back on the cards as you are paying off, you will never get ahead.

Good Luck!

Answer 3

The biggest factor in your credit score is your debt to income ratio. So you want to keep your biggest ones and your oldest ones open, and start paying them all off starting with the ones with the lowest balance and working your way up. If you dont want to use them any more, then cut up the cards and just leave the accounts open. If you have any that have an annual fee, close those ones, but for the rest, leave them open. It wont hurt you to have open accounts and in many cases it will help you. That really isnt alot of cards, my ex's mom had almost 50, each one ranging between 5k and 50k in limits, and her credit score was over 800. You need to leave them open and just pay off the balance, and of course it all takes time. My boyfriend has 6 or 7, 2 of them currently have balances, and his credit score is a 790 at age 25.

Answer 4

First off, you (almost) never want to close a credit card account; the reason is that accounts which have been open for a long time increase your credit score. Once a card is paid off, just stick it in your safe and quit using it.

Secondly, what you should do is pay off the cards with higher interest rates first. (Of course, be sure to make at least the minimum payment on every card). Depending on your credit rating, you might look into getting a new card with a 0% APR on balance transfers and consolidating your debt.

As to number of cards, it's not how many you have, but how you use them. I have about 8 myself but only use 3; the rest I just keep to increase my credit rating.

I'd suggest you read through the information on my link; I think you'd find it helpful.

Answer 5

Pay off the higher interest ones first. Call each one and see if they will lower the interest rate and ask what balance transfer offers you have. BT's are normally at a much lower rate. Then make you a list. APR, Balance, Avail Credit and BT offers. Consolidate what you can to a lower rate. Do not transfer any balance to a high interest rate card that already has a balance. Any payment you make will be applied to lowest APR 1st so the balance at the high rate will keep piling on the interest till the lower rate is paid off. After you pay off the cards keep them open. Without having someone looking at your credit report you can't tell if it will hurt you or not. Your mortgage lender can always advise you to close the accounts later if they are hurting you. Good Luck!
PS.... not to be a stick in the mud, but make sure you keep your balances on your cards and his on his. After you consolidate it doesn't matter where the balance came from, whoevers' name is on the card is responsible.

Answer 6

I think your best bet is to keep them open. It gives you a better usage to credit limit ratio, and most likely a better maximum age. There are some cases where having too much total credit available hurts you, but assuming that it's not the same one of you that has the 22.5k card and the 10k card, I wouldn't worry about it too much. It would probably hurt you more to not have any available balance open than to have too much at those balances.

What I would recommend is to not add each other as joint owners of each other's accounts. Add each other as authorized users, which means you have your own card in your name to that account but it's not on your credit report as an account you're responsible for.

I say this because if those cards are about evenly split between you, it would appear that you both have a healthy enough credit that you don't have to build each other up. In the long run, for purchasing a house and so on, it's better to have each of you have good credit than you to have joint credit in such a large amount that it scares creditors about you overspending and not paying the mortgage.

Good luck. =)

Answer 7

One credit card is all anyone needs.Pick, Visa OR mastercard OR american express, close any store cards and work on getting rid of the other cards and just use one.

To get them paid off, make a game of figuring out how to not spend money and save to pay off the next card, get inventive, do it together and it will happen fast.

After they are paid off, NEVER use a credit card to buy something you don't have the cash to buy. The cash should be waiting in the bank account to pay the bill BEFORE the debt is incurred.

Answer 8

I just keep one credit card. One bill per month, it is easy to see how much I owe instead of getting 12 bills and not realizing just how deep in dept I am. There is no need to have a whole bunch of cards and store charges. Unless they give you some kind of deal, but I get a deal on my credit card, too.

Plus my wallet is nice and thin with only one credit card!

As for paying them off - first of all, STOP CHARGING NEW THINGS. Really, set a budget for youself and pay cash as much as you can. Just remember the big payoff will be the new car and condo. Those are really big things and it takes some discipline to get there.

Answer 9

You can lower your APR by telling your credit card company that you have another offer from another company that has a lower APR. Tell them you want to cancel your card unless they will match it. If they say they can't then ask to talk to a supervisor. Tell them the same thing. They should do it because they don't want to lose a customer.

I think a person really needs just 2-3 credit cards. One for main usage, one for back up, and one for emergencies. I know that the Macys card for store use, doesn't require you to carry it around with you. You can just show them your ID.

I think the best thing to do would be to transfer balances or to just start off by paying the minimum balance of each card, so you don't get slapped with a fine.

Answer 10

Closing accounts will not improve your credit. In fact it may damage it. You need to get all of your statements together and set up a spreadsheet or file with all of their pertinent information-balance, credit limit, rate, etc. Fico scores are complex, multivariable equations that are affected in different ways by different events. The best approach is to start with the card with the highest interest rate and pay it down to below 30% of the credit limit and move on to the next one. This will raise your scores faster allowing you to re-negotiate interest rates on existing cards and thus continue to expedite the process of reducing your debt. Once all accounts are paid in full, continue to use all of the cards at least once every 3 months to keep them active. Do not carry a balance, but rather pay balances in full each billing period. 35% of your FICO score is based on your payment history. 30% of your FICO score is based on the ratios between credit limit and account balance. 15% of your FICO score is based on your credit history and takes into account the age of your oldest account(older the better) as well as the average age of all of your accounts. Because of this, closing older, established accounts lowers your average account age and drops your scores. Furthermore, closing "paid in full" accounts will raise your debt-to-limit ratios and again lower your scores which will lessen your chances of re-negotiating lower interest rates on existing or future accounts.

Answer 11

Some card companies will let you transfer the balances of the other cards to theirs so you will only have to make one payment and only to one place. After you transfer the balances close the accounts.