Important Credit Card question....what should I do?

[digitalduck]

Ok here is my dilema and for anyone that also understand credit, give my some advice...


Ok, my credit is near perfect, (750) and i have had a Discover card for 10 years. Last year I switched to the Miles card they offered because I figured i am using the card I might as well get some points for it. I spent my first 10k and got my first $100 and redeemed it on a hotel night.

Now the second thing is that I shop a lot at Old Navy and i finally singed up for their card today because my good friend who is the manager finally talked me into ti after 3 years.

Now, I understand how credit works fairly well..I know my credit to debt ratio and that is why I didn't want another credit card...I have my discover, best buy and JCPenny (I put one purchase on there and paid it off awhile ago)

So I didn't want to add another card....

My problem is this..I shop at Old Navy a lot and could see how the pioints would be worth it compared ot having to spend 10K to get $100 from Discover...However the card that Old Navy gave me is the Old Navy Visa NOT just an Old Navy card....

I don't know if I want another major CREDIT card and not just an ON card.... so here are my thoughts:


1. Does having another MAJOR Credit Card affect your credit score in any way compared to just having a dept. card?

2. Does having a certain card for a length of time reflect good on your creit score...in which case should I keep the Discover open?

3. I know I will get more points with the ON visa card because I can use it anywhere and get points in which case ill get more back then the Discover card...

4. Which is the better option...keep the Disver card since ive had it for 10 years and switch the ON Visa card to just a regular ON card? OR switch to just the ON card and cancel the Discover card?...and cancel the JCP card...

Thoughts?

Thanks!!!

 

[Walking in Circles]

sounds like a total non-problem

 

[digitalduck]

Haha true..but still have options and am curious as what my best course of action will be...

 

[Viper GTS]

Sounds to me like you don't really understand things all that well.

1) Tradeline is a tradeline is a tradeline as far as your credit score is concerned.
2) Yes, account age matters. Don't close the Discover.
3) So use the card that gives the most points for the situation.
4) Keep them all. Do not close any of them.

Having more cards is not a bad thing (unless you don't have the self control to deal with that much available credit).

Absolutely do not close the Discover card. If you get more points on another card fine, but keep the Discover open. Use it every few months to keep it alive.

Viper GTS

 

[Bignate603]

Originally posted by: Viper GTS
Sounds to me like you don't really understand things all that well.

1) Tradeline is a tradeline is a tradeline as far as your credit score is concerned.
2) Yes, account age matters. Don't close the Discover.
3) So use the card that gives the most points for the situation.
4) Keep them all. Do not close any of them.

Having more cards is not a bad thing (unless you don't have the self control to deal with that much available credit).

Absolutely do not close the Discover card. If you get more points on another card fine, but keep the Discover open. Use it every few months to keep it alive.

Viper GTS

This. That Discover account has a nice long history and has been used responsibly. Keep it open because it shows that you're a good credit user.

 

[digitalduck]

Ok, so how about I just close the JCP since its paid off and I just opened it up 7 months ago to get a good deal on some jewelry...

 

[musicman64]

Nope, don't close anything - you're doing great - just use them every so often to keep them alive.

Hell, if anything, it wouldn't hurt to get another major credit card, maybe an AMEX?

 

[kranky]

Don't close anything. Viper GTS has it right.

 

[Jeff7181]

One way having multiple credit accounts open is beneficial to your credit score is by increasing your available credit. For example, between all my credit cards, I have around $50,000 of available credit. At any one time, I'm only using about $1,000 of that. That's better for my credit score than if I had only $10,000 of available credit and was using $1,000 of that.

By the way... gas cards ftw! I have a Shell gas card that gives me 5% cash back on all Shell purchases, plus 1% on various other categories. No points to mess with, don't have to wait to redeem... 5% of my Shell gas purchases are simply removed from my monthly statement. That's the only thing I use the card for. The rest of my purchases go on my Chase Freedom card where I earn 3% on my top 5 categories. I currently have about 120 points, when I hit 200 points I can redeem them for $250. And because I also have a Chase checking account, my points never expire.

 

[sswingle]

I dont think you understand debt to credit ratio. Another card is GOOD, because then you have more credit compared to your debt. (unless of course you max out your cards)

 

[Capt Caveman]

Originally posted by: digitalduck
Haha true..but still have options and am curious as what my best course of action will be...

Nothing.

 

[esquared]

Here is something else to think about. Department store cards and Gas cards and credit from places like American General Finance and Beneficial are considered second tier credit. You don't want to have too many of those in your possession. It can possibly drag your FICO score down a bit.

You already stated have a BeastBuy card and a JC Penney's card, which are considered department store cards. You don't need a third one, so if you are thinking of getting the Old Navy card, get the Visa one. Having more major credit cards won't really hurt you (I assuming you aren't carrying balances on all of them). Being in possession of too many Dept store and gas cards isn't beneficial.


edit:
I took this from the FICO website:

FICO® scores are calculated based on your rating in five general categories: Components of the FICO® score

* Payment history - 35%
* Amounts owed - 30%
* Length of credit history - 15%
* New credit - 10%
* Types of credit used - 10%

This (types of credit) is the one about second tier credit that I was referring to. It's not a huge drag on your FICO score. But it possibly can drag it down enough where you might need a certain score to qualify for a car loan or a mortgage, and the presence of too many dept store or gas cards can tip that balance lowwer that you might need to qualify.

It's just food for thought.

 

[Skeeedunt]

My five step plan to financial success:

1. Close everything
2. Invest in GOLD!!
3. ???
4. ???
5. ???

 

[zzuupp]

Originally posted by: digitalduck
Ok, so how about I just close the JCP since its paid off and I just opened it up 7 months ago to get a good deal on some jewelry...

There is nothing wrong with closing that card

 

[ebaycj]

Originally posted by: sswingle
I dont think you understand debt to credit ratio. Another card is GOOD, because then you have more credit compared to your debt. (unless of course you max out your cards)

 

[Muadib]

So how much damage do you do by closing accounts? I'm looking to buy a house in the next year, so I ran my credit. I was shocked by both the available credit I have, and that accounts that I thought would be closed are still open. These were store accounts, but the stores folded years ago.

 

[Azurik]

I'm being honest here, and I'm not trying to be a jerk. You don't know too much about credit cards and how credit cards work. I own over 50 credit cards, have done multiple AOR's, know how FICO scores get calculated pretty well, etc. I am the AUTHORITY on this

1) Your Debt-to-Credit ratio is actually better off with additional credit lines. If your debt stays constant and your available credit increases, this helps your score.

2) Some people have an obsession on their quest for the perfect FICO score. This isn't necessary. In fact, with the score you have now, you will be elgible for the best credit terms for any loans you apply for.

3) Having another major credit card helps your credit score long-term. It is considered better than a department card.

4) Part of your FICO score is determined by the average length of your credit history. Keeping the Discover card helps you with a longer average credit age. It will still count once you close your card, but its history and benefits will drop off after 7 years, so I wouldn't do it.

5) Your Old Navy will give you more back in terms of award, but your handcuffed to Old Navy instead of more options that Discover gives you. It's your call since you do shop at Old Navy a lot. I would get another card... like Penfed VISA. 5% back on gas, 1.5% on groceries and 1% back on everything else.

That's all the advice you're going to get from me. Now scram!

 

[nanette1985]

~ don't close the oldest card you have, ever.
~ no, you don't understand debt to credit ratio if you think it's bad to have more cards
~ if the Old Navy card will make you money, then it's good to use it

In general, as you've heard, having lots of credit lines is good for your credit.

EXCEPT that you have to be organized! The number one thing with credit cards is Never Pay Late. If you're not organized enough to stay on top of your payments Every Single Time, then don't have many open cards. Never close the oldest one, and keep a second major card just in case (the credit world is crazy), and then have whatever helps.

To answer your questions

1. Yes, having another major credit card affects your score - it helps
2. Closing your oldest card lowers your score
3 & 4. Rewards are good. JCP, being a store card, you can close if you want, if you're not going to use it - but it is still good to have on your credit report, unless it's not paid on time. It takes a lot more than a couple of store cards to affect your credit rating. If you do close it, it will still show on your credit report, probably forever, but it won't affect your credit score if they accurately report it as paid in good standing.

Pay your bills on time, for more than the minimum, and you'll keep your good credit rating.

Best to you.

 

[esquared]

Originally posted by: princess ida
~ don't close the oldest card you have, ever.
~ no, you don't understand debt to credit ratio if you think it's bad to have more cards
~ if the Old Navy card will make you money, then it's good to use it

In general, as you've heard, having lots of credit lines is good for your credit.

EXCEPT that you have to be organized! The number one thing with credit cards is Never Pay Late. If you're not organized enough to stay on top of your payments Every Single Time, then don't have many open cards. Never close the oldest one, and keep a second major card just in case (the credit world is crazy), and then have whatever helps.

To answer your questions

1. Yes, having another major credit card affects your score - it helps
2. Closing your oldest card lowers your score
3 & 4. Rewards are good. JCP, being a store card, you can close if you want, if you're not going to use it - but it is still good to have on your credit report, unless it's not paid on time. It takes a lot more than a couple of store cards to affect your credit rating. If you do close it, it will still show on your credit report, probably forever, but it won't affect your credit score if they accurately report it as paid in good standing.

Pay your bills on time, for more than the minimum, and you'll keep your good credit rating.

Best to you.

That isn't necessarily true. I have high FICO scores on all three agencies. At one point, years ago, I had a CompUsa Card (Beneficial Finance), which I canceled. I also had two interest free payment plans through my dentist which were financed through American General Finance. They were all paid/cancelled back in 2000 or 2001.

They stayed on my credit report as one of the negative aspects of my score for 7 years. Everything was paid. I am never late. When you get a FICO score, and I am talking of the one where you pay 40.00-45.00 to FICO for all three FICO scores and to get the full read out, they show your score and list all the positives and the negatives that were/are affecting your score, aong with all three credit reports from all three agencies.

Even with the scores I had, which were high, they mentioned in the Negative Factor column that one reason my score wasn't even higher was the presence of this second tiered credit I mentioned, Dept stores card(s), finance companies, gas cards.

I agree that one Dept store card and even possibly two might not trigger a negative comment in the section, but I had three of those on my report and it showed up the the negative factor comments section for 7 years.

In your case it might as you already have two Dept store cards and adding a third Dept store card most likely would show up as a negative aspect of your scores. It won't drag the score down a lot because it is only 10% of the FICO calculation, but a third one will affect it some. As I said, if you get the OLD Navy card, make sure it's the Visa bank card.

OP has two Dept store card and one Discover card. Keep all cards, if you canceled the JCPenney card and or the Beastbuy card, it would still be on your record for 7 years. You may as well keep it because it adds to the length of time and the amount of available credit you have.

 

[Muadib]

Originally posted by: esquared

Originally posted by: princess ida
~ don't close the oldest card you have, ever.
~ no, you don't understand debt to credit ratio if you think it's bad to have more cards
~ if the Old Navy card will make you money, then it's good to use it

In general, as you've heard, having lots of credit lines is good for your credit.

EXCEPT that you have to be organized! The number one thing with credit cards is Never Pay Late. If you're not organized enough to stay on top of your payments Every Single Time, then don't have many open cards. Never close the oldest one, and keep a second major card just in case (the credit world is crazy), and then have whatever helps.

To answer your questions

1. Yes, having another major credit card affects your score - it helps
2. Closing your oldest card lowers your score
3 & 4. Rewards are good. JCP, being a store card, you can close if you want, if you're not going to use it - but it is still good to have on your credit report, unless it's not paid on time. It takes a lot more than a couple of store cards to affect your credit rating. If you do close it, it will still show on your credit report, probably forever, but it won't affect your credit score if they accurately report it as paid in good standing.

Pay your bills on time, for more than the minimum, and you'll keep your good credit rating.

Best to you.

That isn't necessarily true. I have high FICO scores on all three agencies. At one point, years ago, I had a CompUsa Card (Beneficial Finance), which I canceled. I also had two interest free payment plans through my dentist which were financed through American General Finance. They were all paid/cancelled back in 2000 or 2001.

They stayed on my credit report as one of the negative aspects of my score for 7 years. Everything was paid. I am never late. When you get a FICO score, and I am talking of the one where you pay 40.00-45.00 to FICO for all three FICO scores and to get the full read out, they show your score and list all the positives and the negatives that were/are affecting your score, aong with all three credit reports from all three agencies.

Even with the scores I had, which were high, they mentioned in the Negative Factor column that one reason my score wasn't even higher was the presence of this second tiered credit I mentioned, Dept stores card(s), finance companies, gas cards.

I agree that one Dept store card and even possibly two might not trigger a negative comment in the section, but I had three of those on my report and it showed up the the negative factor comments section for 7 years.

In your case it might as you already have two Dept store cards and adding a third Dept store card most likely would show up as a negative aspect of your scores. It won't drag the score down a lot because it is only 10% of the FICO calculation, but a third one will affect it some. As I said, if you get the OLD Navy card, make sure it's the Visa bank card.

OP has two Dept store card and one Discover card. Keep all cards, if you canceled the JCPenney card and or the Beastbuy card, it would still be on your record for 7 years. You may as well keep it because it adds to the length of time and the amount of available credit you have.

It could be on your history longer than that. I have accounts on my history from furniture stores that folded back in the late 90's. My Wiz account is still there too, and they went under in 95 I think.

I'll chime in that the OP shouldn't cancel anything.

 

[esquared]

because it adds to the length of time and the amount of available credit you have.

It could be on your history longer than that. I have accounts on my history from furniture stores that folded back in the late 90's. My Wiz account is still there too, and they went under in 95 I think.

I'll chime in that the OP shouldn't cancel anything.

Yes, they will always be on your history, that doesn't go away. I meant that after 7 years anything that was previously used in the calculation of the FICO will not be used. That is why after 7 years, the comments in the Negative Factor Section about too many second tiered credit accounts went away. My accounts are all still there in the history.

 

[Muadib]

Originally posted by: esquared
Yes, they will always be on your history, that doesn't go away. I meant that after 7 years anything that was previously used in the calculation of the FICO will not be used. That is why after 7 years, the comments in the Negative Factor Section about too many second tiered credit accounts went away. My accounts are all still there in the history.

But other accounts that I've canceled are gone. I had an at&t mastercard that I canceled back in the late 90's that's gone. So is the Firestone card I had. How do you explain that?

 

[esquared]

Originally posted by: Muadib

Originally posted by: esquared
Yes, they will always be on your history, that doesn't go away. I meant that after 7 years anything that was previously used in the calculation of the FICO will not be used. That is why after 7 years, the comments in the Negative Factor Section about too many second tiered credit accounts went away. My accounts are all still there in the history.

But other accounts that I've canceled are gone. I had an at&t mastercard that I canceled back in the late 90's that's gone. So is the Firestone card I had. How do you explain that?

Hmmm. No idea. I have accounts I have canceled in the 90's and they are still on my report.

 

[spidey07]

*sigh*

Listen to Azuric. I had to crawl my way out of a divorce credit wise and if you only follow SOUND and ACCURATE advice you will be rewarded. I honestly think this is probably the biggest misinformation spread on the intarweb. Credit advice that is. Azuric has it nailed.

 

[kranky]

Originally posted by: Azurik
I would get another card... like Penfed VISA. 5% back on gas, 1.5% on groceries and 1% back on everything else.

Even better than you thought, Azurik - The PenFed Platinum Cash Rewards card is 5% on gas, 2% on groceries and 1.5% on everything else.