So I've got 14 or so accounts in good standing... Credit question.

[Hossenfeffer]

Yeah, I'm less than "financial guru"

Anyway, 3 of them are old accounts that are listed as Inactive. Wondering how I should handle things and what would be best for my credit. Should I close them, reactivate (if only for the sake of raising the total credit available, not to charge anything), get zero-balance letters, etc....?

All three accounts have zero balances and, obviously, I haven't used them in several years. One is a Disney account I opened in 94 😉

3 accounts have 30 day lates on 'em. 1 in 98, 2 in 2002 (d'oh.). I've got a couple years before the first one drops off. Anyone have an idea as to how much that might affect my credit score (a whopping 630 right now 😉 )?

 

[StageLeft]

14 accounts is cockriculous. Close a lot of them now. Too much credit starts to lower your score, so more cards does not always help it. Kill those off, and I'd cut your total credit card accounts down to 3 or so (if the 14 are all credit cards).

Those two 30 day lates in 2002 will be definitely hurting your score a good bit. The 98 will probably have little to no significance on your score. I'd say that ideal credit will probably be maximized with a mortgage, one car loan, and no more than 3 credit cards. I have a car loan, house loan, and one CC, and my credit is as good as I ever will need it to be somewhere in the 700's. I could get another credit card, but I just don't care too. Obivously, the longer you keep these accounts the better, but having 14 accounts reflecting on your credit report shows that your finances are in a mess and you can't buy a damn thing without borrowing for it, which is part of the reason your credit score is so low (that and the 2 dings in 2002, plus perhaps you have a number of inquiries on there which will hurt your score for 12 months).

 

[Hossenfeffer]

Thanks for the tips.

I'll work on getting the inactives gone, then see about getting rid of a couple of the others. Now that I look over it, 1 "account in good standing" is my paid student loan. I think there are another couple things listed that are paid as well. So I guess 10. That being said, I'm working on reducing the number of active accounts, paying off high interest cards first.

I'd love to get some sort of loan and pay all but 1 or 2 of the accounts off. In my head, I've been paying such a huge amount per month for the last 6-7 years, so a bank could logically rest assured I could handle loan payments. But I'm wacky like that. I'm assuming that they see my annual income (varies from $8k a year to around $25k) and immediately drop me from loan consideration.

 

[Blieb]

good standing and closed are two VERY different terms ...

which are they?

 

[Hossenfeffer]

Originally posted by: Blieb
good standing and closed are two VERY different terms ...

which are they?

I'm getting credit reports from the other two agencies to try and figure out who's got what classified where.

The experian report I'm looking at categorizes accounts in either positive or negative standing. The 3 accounts in question are listed on the Experian reports as "Inactive/Never Late" or some such. They were never officially closed.

At any rate, it's about damn time I start cleaning up the report.

 

[freebee]

Why does fatw@llet finance tell you that closing accounts is a no-no?

Conversely, would opening many different accounts (and having a significant income) boost the credit score into the high 800 range?

 

[StageLeft]

Why does fatw@llet finance tell you that closing accounts is a no-no?

Link? Every credit advisor I've read about says that too many accounts are bad. Too few show that lenders have little faith in you (bad score), and too many show that you have too much potential debt if you were to extend yourself within the credit available to you.

 

[freebee]

Originally posted by: Skoorb

Why does fatw@llet finance tell you that closing accounts is a no-no?

Link? Every credit advisor I've read about says that too many accounts are bad. Too few show that lenders have little faith in you (bad score), and too many show that you have too much potential debt if you were to extend yourself within the credit available to you.

This is one that I was reading not too long ago. The question comes up fairly often, the SIS guy and a buncha others seem intelligent.

fartwallet link

 

[sandmanwake]

Scoorb, I'm going to have to disagree with you. It's not necessarily a bad thing that he has all those credit line open. By the way here's a link to Fatwallet's finacial myth thread:

http://fatwallet.com/forums/messageview.php?catid=52&threadid=225082&highlight_key=y&keyword1=myth

That said, I would figure out which line of credit are with companies that tend to close the account if they go inactive for a while. Having a credit line closed by lender will hurt your credit score. You want to close those yourself if you're not going to use them within the time frame of when the credit line gets closed. Most department store credit cards are like this--you know the ones you sign up for while at the mall because using their credit card at their store will save you an additional 15%.

If you want to build up your credit score, actively use your credit cards for purchases and pay them off in full each month. For example, I use my credit card to pay for grocery and gas even though I could easily use cash, cheque, or debit card. Like I said though, have the self control to pay the full balance off each month. If you don't, you might as well use a debit card for those purchase. It won't help you build your credit score, but it'll help you stay out of debt. And for crying out loud people, check your bank balance on your computer at least every three days or so--it seems like every time I walk into a bank I run into some college student who has an overdraft fee because he/she went drinking the other night and used their debit card thinking they have plenty of money, but never took into account things that hadn't posted yet. They only check at the atm.

 

[dirtboy]

Originally posted by: Skoorb

Why does fatw@llet finance tell you that closing accounts is a no-no?

Link? Every credit advisor I've read about says that too many accounts are bad. Too few show that lenders have little faith in you (bad score), and too many show that you have too much potential debt if you were to extend yourself within the credit available to you.

Rarely does one get dinged for having too much potential debt. The more available credit you have, the better. It shows that more than one person trusts you to manage debt appropriately.