I've read alot about building credit and I've read that your credit score is calculated by FICO which increases your score depending on how many on time payments you make and decrease on how many you miss. It also decreases it if you apply for too many credit cards and do other little things like that. So does having more credit cards increase your score as long as you dont have an outstanding balance? or does it lower it? If you have a credit card with no balance does that lower it the longer you have it without using it?
I know this all sounds confusing but I'm new to all this and I just recently applied for so many cards which was probably bad. I finally got a few and I wanna make sure I approach this correctly to build credit without going in debt or screwing myself over like many people.
Any info/tips on this topic would be greatly appreciated. Thanks a lot!
2007-12-06 09:38:34 · 10 answers · asked by Sarah 3 in Business & Finance ➔ Credit
...Why avoid department store cards? I just got one its a Sears mastercard, but it can be used outside Sears....does that count?
How long should you wait before applying for a card with a lower APR. mine is 25%!
2007-12-06 09:43:39 · update #1
Credit scores are based on the following factors;
1. Payment history 35%
2. Time in bureau 15%
3. Types of credit 10%
4. New credit 10%
5. Debt to credit ratio 30%
The number of credit cards a person has is not important, what is important is how the manage them.
As long as you keep your balances below 30% or your credit limit and pay on time every month, you will be fine.
Notice there is no mention of credit/debt to income ratio in the above list, this is because no matter what anyone says neither of these matter as far as score goes.
For the very best score and profile you will need 3 credit card accounts (revolving) with balances belwo 30% of your credit limit and 2 cars, boats, homes, furniture or personal accounts (installment) all with good long pay history's.
Good credit takes years to establsih and only a couple of months to trash.
2007-12-06 09:42:53 · answer #1 · answered by ? 7 · 6⤊ 0⤋
It probably wasn't a great idea to apply for som many cards. Your credit score is affected by how many times your credit is pulled. So everytime you applied for a card, your credit was pulled. Not good but it won't ruin your credit. Having too many cards w/ a 0 balance is better than having 3 or 4 with high balances. When purchasing a house or car, creditors always look at your debt to income ratio. If you have alot of debt with low income, you probably won't get approved for big purchases. Whatever you do, do not rack up bills that can't be paid in full at the end of the month. That is a sure fire way to ruin your credit! Believe me I am 28 and still trying to pay off bills from when I was 18! Having one or two cards carrying low balances (under $200) and no late payments is pretty good for your credit. It shows you are responsible & using your cards (which the credit companies like to see). Just don't have more than 2 or 3 cards and try to keep the outstanding balances low. Good luck on this new phase of your life!
2007-12-06 09:50:03 · answer #2 · answered by mom737 2 · 1⤊ 0⤋
closing accounts will lower it so dont close any of them now, having a card and not using it doesnt effect fico score, applying for a new account will lower score particularly if u apply for a number of accounts at 1 time, everyone pulls credit and it is called an inquiry, the score deletion comes off after 90 days, but the inquiry stays on for 2 yrs to show other lenders what u have been doing, pay ur bills on time over time dont pay off balances if u r trying to build a score. the game is played over 12-24 month time frame showing payments on time as agreed. with new credit/weak credit 1 30 day late can destroy ur credit for a long time
2007-12-06 09:48:18 · answer #3 · answered by donald e 4 · 1⤊ 0⤋
SPIFIMAN is correct again. Try to stay away from cards with low limits. If you get a card with a low limit after a few months of good payments call them up and ask for a increase. Tell them why you want it.
Also I have a card just for rebuilding send me a e-mail and I will let you know where and how guaranty 5 - 10k limit reports to all 3 credit reports.
ryan@robertscreditgroup.com
2007-12-06 10:05:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Good credit is based on a lot of things... paying on time and paying debt off is best! I have a lot of credit cards in my history most with 0 balance and my credit score is very good. But you need to have (I think) less than 10% of debt vs. advailable credit and never miss a payment. Short of the long, be very smart with credit... It can be a trap!!
2007-12-06 09:45:13 · answer #5 · answered by JK 2 · 1⤊ 0⤋
Don't open too many. Sure, you can decide to not use them, but the opportunity and temptation might be there.
If you have specialty cards, such as Walmart, sears, ectc, you don't need them if you have Visa, or MC.
Don't cancel them that can have a negative impact too. Just put them away and forget you have them.
2007-12-06 09:54:53 · answer #6 · answered by TedEx 7 · 0⤊ 0⤋
opening too many cards in a year will lower your fico score.
2007-12-07 07:22:55 · answer #7 · answered by Steve R 6 · 0⤊ 0⤋
yes. stick with one or two major credit cards (mastercard, visa). especially avoid department store cards.
2007-12-06 09:41:28 · answer #8 · answered by Anonymous · 1⤊ 0⤋
not bad at all. Keep as many open and FULLY paid each month as you are able. This will help a lot.
2007-12-06 09:41:09 · answer #9 · answered by Anonymous · 1⤊ 0⤋
Don't open too much. Open a few and use them correctly. This willgive good history.
2007-12-06 09:41:53 · answer #10 · answered by psychopiet 6 · 1⤊ 0⤋