Credit advice...I need your advice ATOT!

[hellfreeze]

So I messed up my credit when I was 18, and I've been working hard towards correcting it, and I'd like to only make it better.

I'm thinking about closing out some of my credit cards, but I'm not sure if it would be a good idea. Please help me! :beer:

Currently my score is 651 with Experian...here are the open accounts on file:

CC #1 - $500 limit...open for about 4-5 years
CC #2&3 - $300 limit...open for about 2.5 years
CC #4 - $600 limit...open for about 1.5 years
CC #5 - $300 limit...open for about 6 months
CC #6 - $300 limit...open for about 2-3 months
CC #7 - $4,000 limit...just opened

I also have 4 other credit cards on file that are authorized user accounts with about $20k limit each that have been opened for 10+ years

Yes, I know the APR is high on most, but my credit score was around 340 so I took what I could get to try and improve it.

I'm thinking about closing all my cards (except the authorized user accounts) except my recent $4k card and a $300 for my monthly budget. I'm not planning on keeping any balances on the cards. My only concern is that by closing the accounts I'll be negatively affecting my credit. Can anyone help shed some light on this for me? :beer:

 

[mshan]

One thing I read is that if you are house hunting, you can improve your credit score by reducing your actual debt to credit card limit under 10% (or 30%, I forgot).

How have various credit card companies treated you if there was a mistake or you carry over balance? Are they accomodating, or do you get hit with ridiculously high penalties over and over?

 

[hellfreeze]

Originally posted by: mshan
One thing I read is that if you are house hunting, you can improve your credit score by reducing your actual debt to credit card limit under 10% (or 30%, I forgot).

How have various credit card companies treated you if there was a mistake or you carry over balance? Are they accomodating, or do you get hit with ridiculously high penalties over and over?

i'm not sure...I've only applied for those poor credit credit cards up until now. I went a while without applying for anything, Chase approved me so I guess my credit isn't too bad. I should be able to bring my score above 700 once I pay off the other cards, but that's going to take me a few months.

 

[mshan]

I don't know how much debt you carry month to month, but if you can spread it over two or three credit cards (and be no where near maxxing out any particular one), that's probably a good idea.

I think credit companies also like to see a history of paying, so more established credit card is probably good, and you can see if you are eligible to increase credit limit.

And I recommend this book highly: http://www.amazon.com/Personal.../ref=pd_ecc_rvi_cart_1

 

[kranky]

Do NOT close your accounts. There is no benefit to doing that. Pay them off and use each card once every six months so the accounts stay open. The accounts where you are an authorized user are very helpful to your score but there is talk about FICO changing the system so AU cards do not count. You need to keep your own cards open just in case that happens.

Under today's system, you could probably close those tiny cards and not hurt your score, but if they change it so AU's don't count, you would get hosed.

I would make CC7 my everyday card, and pay in full every month. 6 months down the road, ask for a credit line increase.

If you have any negative information reporting on your credit record, look into trying to clean that up. That's the thing which would increase your score the most.

 

[hellfreeze]

What would look better for CC7...if I charge a soda every month then pay it off, charge my monthly expenses then pay it off, or only charge something every 6 months?

The other cards all have annual fees, which is why I'm thinking about closing them.

 

[kranky]

Originally posted by: hellfreeze
What would look better for CC7...if I charge a soda every month then pay it off, charge my monthly expenses then pay it off, or only charge something every 6 months?

No difference. But if you use the card regularly, you will probably increase your chances of getting a credit line increase later.

The other cards all have annual fees, which is why I'm thinking about closing them.

In that case, close them. Not worth paying to keep those open.

This advice is based on you having a total of $80K credit lines showing on 4 other cards as an AU. If you have a clean report, you'll be able to get other cards before very long.

 

[hellfreeze]

Originally posted by: kranky

Originally posted by: hellfreeze
What would look better for CC7...if I charge a soda every month then pay it off, charge my monthly expenses then pay it off, or only charge something every 6 months?

No difference. But if you use the card regularly, you will probably increase your chances of getting a credit line increase later.

The other cards all have annual fees, which is why I'm thinking about closing them.

In that case, close them. Not worth paying to keep those open.

This advice is based on you having a total of $80K credit lines showing on 4 other cards as an AU. If you have a clean report, you'll be able to get other cards before very long.

not too clean...i have about 2 collections from 5 years ago...so hopefully in a couple of years those will fall off.

maybe i should pay off the balances quick, open another $4k card then wait for the new FICO system

 

[kranky]

Check out the Credit forum at creditboards.com. You might be able to get those collections off your record before they will fall off on their own. It would be well worth spending some time to get them removed.

 

[CrimsonChaos]

You're going to get a lot of different answers. Check out this link instead -- specifically the question "Is it a good idea for a consumer to close unused credit cards?"