Will this hurt my hubbies credit?

[Charity_23]

Back in Sept. we applied for a sears card bc they usually have good deals on appliances and have 0% intrest with no payments for like 12-24 mths! Plus they give you like $40 off ur first purchase. They ran his credit and a reciept popped out with an approved credit limit of $8,000 !!! I was like OMG! This can get us in trouble..So since then we have charged some things and now the balance is 0 again, but the interest rate is so high so I really really doubt unless we need a new washer dryer or appliance that we will use that card again. And if we do we might use like $2,000. I will never use 8,000 bucks at a %24 intrest rate. We have since applied for the disney card from chase and have 0% interest for a year and have already earned like 42 reward dollars..Its great because weve put over 3,000 on sears card and they havent given us not 1 point for it. Anyway that card eventually after a year is like 9.9% so its pretty good.Well since we dont really need $8,000 I requested a decrease to about $2,000. Does anyone know if this will hurt his credit.?? People say temporarily, but I figured having less credit on that card we might be able to get approved for a better low interest card. No sense in having such a high limit if were not going to use it right? But I started thinking that in the end it could hurt his score? I mean I dont care about a few points but I would hate for it to go down drastically...

Also does anyone know if it would be safe to close unused accounts!! They always get me at the store when they offer deals if you agree to open accounts, especially dept stores.. We do try to only get cards for the stores that we would most likely shop at like Lowes, and we even got a Drivecard from Freetireservice for tires, and incase an emergency happens and we need car repairs!! (they also have deals depending how much u spend for 0% interest for like 6 mths) I would like to close this JC Penny card bc weve only used it once for furniture but they are kind of expensive. I think I would only buy clothes from JC pennys!! Im just scared to mess up his credit score bc last time I checked it was like 758 and thats really good. He just got his SSN in July and hes already got really good credit!! Now just to build up the length of his credit history!!
:wave:

[LilB]

Wow girl! Your hubby must have good credit to get a credit card from Sears! That's awesome! Don't abuse it though. Two good rules of thumb:

Never go more than 1/2 of the credit limit.

Try to pay your accounts in full or at least make more than the minimum payment each month.

Credit advice online always says to close accounts you don't use. Find advice from legitimate sources online before you make a decision to do that. Maybe when I get home I'll find a few good articles for you.

[Pooh79]

I think a decrease is better than to close it. I closed a few of mine and it hurt my credit. It's better to keep them open and not use them than to close them altogether.

[Charity_23]

If I decrease the limit will it look like Im having financial trouble or something??

I mean, most people that are having trouble usually have to use their cards or max them out!!

I just have to learn to control myself and not apply for every store that I like to shop at. I usually like the dept. store cards like fashion bug, old navy, and goodys.. I used to have all those cards when I had good credit..

When we went to sears to apply for the sears card I thought they were just going to give us a regular sears dept store card and they gave us the gold mastercard with way too much of a limit..And its bad bc when we want cards for other stores they give us less credit. I mean I could really use $1,000 at lowes bc we are always buying things for the home but they only gave us $500..Im sure we could get an increase by now but only if we really need something..I love it bc they also have the 0% interest for 12 mths at certain times or on certain items..
We also have a Walmart card and now until Dec u spend $250 or more and get no interest for 12 mths.. that really helps bc its almost like paying cash and it gives us plenty of time to pay it off..

As soon as my husband got a SSN my sister added him on just as a second cardholder and they asked for his SSN. Now it says he has an American Express since 1999 on his credit report so it looks like he has a really long credit history.
THats also how my mom got her REALLY good credit when my uncle put her on his Amer. Xpress and now she has one of her own..And 8 years ago my mom completely wrecked her credit. She maxed out like 4 cards and was unable to pay them back..It was all erased after 8 years..SO thats good news for those of us who have made mistakes in the past..I filed Bankruptcy in 2003 and Im just now getting my credit back..I have one card but it has an annual fee of $39 which isnt that bad!!

[pen1137]

don't close any unused accounts-that will lessen your "borrowing power" and affect your credit score. :)

[nineten]

Most of the advice I've seen says that its much more important to keep your average account "age" high and percent utilization low than it is to keep your available credit to income ratio low.

Once you have good credit you'll receive a blizzard of pre-approved offers from other lenders. These aren't actually pre-approved for the amount they state you might be eligible for. They are sent to you because they've gathered information from crediting sources regarding your history and you're a safe risk. After you sign them you'll find you probably won't receive the entire amount mentioned. Every time you apply for a card an inquiry is going to be made on your credit reportt. If you have too many of them over a period of time that will affect your score in a negative way.

Gas companies and department stores that issue charge cards typically use finance companies, rather than major banks, to handle the transactions. These cards aren't going to do as much for your credit score as the bank cards such as (Visa, MasterCard, Discover, etc.), but they're usually easier to get. And don't go overboard. One or two of these cards is enough. If you get too many more, you may find that later in your life these accounts could prevent you from getting the highest possible credit score. Just don't apply for half a dozen.

To try and get thee best credit score, you'll need to use a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). After you've had and used them responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration of time short, no more than a year or two, that will help you build credit while limiting the amount of interest you pay.

Try to use your revolving accounts lightly but "regularly" and for a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months and using your cards regularly should ensure that your report is "updated regularly".

If you get a credit card and never use it, the issuer could cancel the account. I try to use some of them once in a while.

Canceling a credit card can significantly raise your credit-utilization ratio and in turn lower your credit score. Take this for an example, you have $10,000 in credit on 3 credit cards and have a total amount of debt of $2500. Your credit-utilization ratio would be 25%. If you cancel one of your cards that has a zero balance and a credit line of $5000, your credit-utilization ratio would increase to 50%. The higher ratio would lower your credit score.

If you're having problems with debt, then canceling a credit card can help by eliminating the temptation to increase your debt. While canceling the credit card may lower your score in the short term, the benefits of not increasing your debt and paying down your current debt will go a long way to helping increasing your credit score in the future.
Closing the account will lower your total available credit, which will not help your score. It’s better for your score to simply "destroy" the card but keep the account "open". If you decide to cancel one of your credit cards to help you better manage your debt, cancel your newest cards first in order to avoid getting doubly dinged on your credit score. Canceling older credit cards can hurt you because the length of your credit history matters in calculating your credit score. If you cancel your older credit cards first, then you decrease your credit history.

If you cancel a card, make sure it's noted, "Cancelled at Customer's Request." I've done this in the past but the one that I cancelled was about seven years ago and I've decided to keep the others. Follow up with a letter certified stating that you had requested this so that if there's any problems in teh future you'll have this for your records.

If you decrease your limit, make sure that you clearly explain to the rep "why" you are requesting a decrease. Say that it's not for financial reasons but security reasons. You don't want to have alot of available credit out there if you are not going to be using it.

Don't charge more than 30% or 50% of the card's limit and don't charge more than you can pay off in a month. You don't have to pay interest on a credit card to get a good credit score, and it's a smart financial habit to pay off your credit cards in full each month. Don't wait three days before the due date to send in your payment. It's better to send it in ten days before that date so you'll avoid unexpected mail snags or crediter admn misshaps which can happen and it's better to pay the bills online and your acct is quickly noted as current.

Also check on-line for info on debt-to-incoome ratios.

[Charity_23]

THanks that sounds like very good advice. I am going to try to be as careful as possible!!

[JustMe]

The more credit you show on your credit report over the years, the better for your credit. Use your credit cards wisely and try to pay them of as soon as possible. There are so many factors to build a good credit score. Don't close or lower your credit limit amount, this will hurt your score, even though it says closed by consumer. The length of your credit is important as well. Always pay off the newest credit card first and the most important part is pay on time. Try not to go over 50% of your total credit limit otherwise your dept ratio is to high and credit card companies could rise your interest from under 10% to over 20% and if you don't accept it, they will close your account. Another negative factor is don't try to get to much credit in a short period of time.

It took me a long time to fix my husbands credit, after 5 years, his credit score is close to 750 and he just qualified for a $500.000 home loan, we don't need that much for our new home but it is a good feeling to see, for how much he qualified for.:yay2: Most important, the higher your score and the lower you dept ratio is, the less interest you pay for your mortgage, credit cards or car loan.

[JennyM]

I had over 12 CC and most had 0 balances, I cancelled them all expcept 3 and moved all my debt to one card. The longer a card is open, the higher the points, the newest debt make you're points lowered so when people do balance tranfer to balance tranfer it looks as though they have debt problems. Credit Scores get updated every six months. My word of advice. Cancel the lowest cards and keep the high available credit...it actually looks better if you have 2 cards of 24,000 available then 10 @ 5,000. And ALWAYS pay more than minimum due.

Some people have no choice to use thier credit cards so sometimes its not possible to pay in full every month.

[jeannie]

I'm always looking for ways to improve or keep my credit on track. Will I actually read that if you have an account open and you never use it that actually hurts your credit. Some creditors will even close it for you and that will make your credit look bad. What you should do is use it and pay it back before the month is up. That way you won't be charged the interest,but it will show activity on your account. And good activity.

[JennyM]

http://www.credit.com/credit_information/credit_help/Credit-Myths-Revealed.jsp

Credit Myths Revealed

by John Ulzheimer
Everyone knows of and possibly believes in a great myth. Whether it’s the Loch Ness Monster, Bigfoot, Alien Crop Circles or the Abominable Snowman we’re all hooked to some extent. But unless you seriously have plans to spend time across the pond diving for prehistoric marine mammals then your belief probably won’t become a serious threat to your wallet.

There are several myths, however, that are widely accepted as the truth (insert your favorite political one-liner here) and can cost you a bundle if you’re not careful. These myths come right out of the world of credit reporting and credit scoring. Believing that the following are factual can cost you plenty.

Making a lot of money will help your credit report and your credit scores.
It’s amazing how many people will say “do you know how much I make” when they get decline letters in the mail or don’t get the best interest rates or the highest credit limits. The assumption is that an impressive salary leads to a great credit report and credit score. The fact of the matter is that your salary has nothing to do with your credit reports or credit scores.

Now that doesn’t mean that a great paycheck won’t help you qualify for the credit you desire. It will. But not like you may think. Your salary is important to lenders but not important in a credit worthiness way. It’s important for them to know that you have the ability to make the payments that you are going to be saddled with for the next 5, 10 or 30 years. That’s called “capacity.”

Lenders use your salary as a measurement of your capacity to make the required monthly payments. Your credit reports and credit scores are how lenders determine your credit worthiness. One is as important as the other but you won’t be approved for the best interest rates if your credit stinks…regardless of how much money you make.

So, congratulations on that killer W2…but don’t think that’s all that matters.

Paying cash for everything will help your credit rating.
I call this “credit avoidance” and for some reason people think that it’s a good idea. The cash and carry crowd has it wrong here.

You have to have some sort of history of responsible credit use in order to establish solid credit histories and credit scores. If you don’t establish and maintain various types of credit accounts then your scores won’t be as good as someone with a long history of responsible credit use. Surprise surprise!!

The next logical comment is “well, if I don’t ever plan on using credit then why would I need a good credit history?” Come on. Can anyone reading this seriously tell me that they function efficiently without any sort of credit?

That would mean that you paid cash for your house and cars, don’t rent movies at the local rental store that requires a credit card number on file, don’t ever buy anything online and carry around gobs of cash when you go on vacation. I don’t think so.

Credit use isn’t bad. Credit abuse is bad. Please don’t think that using cash for everything is somehow better than using credit responsibly. It simply isn’t.

A great credit score is a result of a credit report WITHOUT any late payments.
Paying all of your bills on time is a great start. And, you will not have excellent credit reports and scores without a clean payment history. But, it’s not the only thing. In fact, it’s only 1/3rd of the equation.

A full 2/3rds of your credit score is derived from things other than how well you pay your bills. That’s quite a surprise, especially to someone who is in an incredible amount of debt but somehow struggles to make his or her minimum payments every month.

This person is referred to in the credit world as a “ticking time bomb.” It’s just a matter of time before it goes off. If you want to have the best scores possible you must perform well in not only making your payments on time but by also staying out of overwhelming debt.

A divorce decree will absolve you of your credit responsibilities.
Going through a divorce is difficult enough without having to worry about dividing credit debts. Unfortunately, it’s certainly one of the most important items to focus on as you are proceeding through a divorce.

Generally part of the process is dividing the credit debts. Here the judge will decree that one or the other spouse will be responsible for making payments on car loans, mortgages, credit cards and other credit obligations. That’s fine but the judge’s decree doesn’t override the contract that you signed with your creditors. So, if you and your spouse both signed to take out a mortgage or a car loan and it stops being paid by the newly responsible party then both of you will suffer.

The lender will almost certainly report the late payments on both of your credit reports and if the account goes seriously delinquent or even into the dreaded collection status then your scores will suffer for years despite what the judge said.

All three of your credit reports and credit scores will be the same.
Nope. In fact, the opposite is almost a guarantee. It’s a certainty that all three of your credit reports will be different and, therefore, so will all three of your credit scores.

There are three primary reasons why this is so. They are...

Not all of your accounts will be reported to all three credit -reporting agencies. Since reporting is a voluntary act, not all lenders report to all three.
You will most certainly have a different number of inquiries on your three credit reports. An inquiry is a record of when someone or some company accesses your credit report. Since most lenders just pull one of your three credit reports (except for mortgage lenders) you will have a different number of inquiries on your reports.
Lenders don’t always update their accounts on your credit reports at the same time. For example, Dave’s Bank might update their accounts at Equifax the first week of the month, Experian the second week and TransUnion the fourth week.
It’s because of all of these reasons that your credit reports and scores will not be the same across the board.

If you have poor credit then your credit scores will suffer for seven years.
Fortunately for those who have had credit problems in the past this isn’t exactly true. The way the credit scoring systems are designed allows consumers to start improving their scores very quickly, months later in some cases.

The credit scoring systems are dynamic, meaning that the scores are calculated based on your credit information as of that time. If the information on your credit files changes tomorrow, then so will your scores.

This is good news especially for folks who are about to pay off a large chunk of their credit card debt or are able to have negative information removed from their credit reports. You should see immediate improvement in your scores. No waiting required.

Check Cards can help your credit reports and scores.
This isn’t true. Check cards (also known as Debit Cards) are nothing more than plastic access to your checking account. Since checking accounts aren’t recognized as an extension of credit (although I’ve heard some pretty good arguments that they are) then they don’t end up on your credit reports.

The confusion comes in part because of the Visa or MasterCard logos that are on the debit card. They look exactly like credit cards so the assumption is that they count.

The bad news here is that they could hurt you if you aren’t careful with how you use and manage them. If you become overdrawn on your checking account because you don’t track the use of your check card then it could result in bounced checks. And since there are companies that track and report poor checking account management any abuse could come back to haunt you.

Moving your credit card balances around will help you hide your debt from the credit scoring models.
Credit scoring models are much smarter than people give them credit for. It’s impossible to hide your credit card debt.

There’s a measurement taken every time your credit score is calculated called “total revolving debt.” This is total amount that you currently owe your credit card companies. The problem for folks with a lot of different credit cards with balances is that this is an aggregate measurement. This means that if you have 10 credit cards each with $1000 balances OR 5 credit cards each with $2000 balances then you are still going to have $10,000 in revolving debt.

And, if you opened a new “no interest for 12 months” credit card and consolidated the $10,000 onto that one account then guess what…you still have $10,000 in revolving debt. You simply can’t hide it unless, of course, you pay it off.

Paying off (or “settling”) late payments, tax liens, collections or judgments will remove them from your credit reports.
It’s not that easy. While it’s the responsible and right thing to do, don’t expect any miracles to occur just because you pay off some or all of your negative credit related debts.

For some reason people think that by paying these things off they will somehow disappear like they never happened. No, no, no, no. They aren’t going anywhere for seven years in most cases. They will be updated on your credit reports to show “paid collection” or “released tax lien” or “satisfied judgment”, which is much better than the alternative but they will still be there negatively impacting your credit scores.

This myth is commonly abused by collection agencies that offer to have your collections removed from your credit reports if you’ll pay them off. It sounds like a good deal but unfortunately in order for them to be completely removed they must be erroneous.

If you ever have the occasion to speak with someone from any of the three credit reporting agencies ask them if they will remove accurate negative information simply because it’s paid in full. The answer will always be “no.”

Closing credit cards will increase your credit scores.
This is the granddaddy of all credit myths. It’s by far it’s the most prevalent piece of advice that consumer’s seeking credit guidance are given as a remedy for poor credit scores. It can also cause the most damage.

Here’s why…

Another of the measurements taken by the credit scoring models is called “revolving utilization.” This is the percentage of your available credit card limits you are currently using as balances. Here’s how it works: if I have 10 credit cards each with a credit limit of $10,000 then I have an aggregate credit limit of $100,000 ($10,000 times 10 cards). Let’s say that five of those cards are completely maxed out with $10,000 balances. You have an aggregate credit card balance of $50,000 ($10,000 times five). Since you are using up half of your credit limits ($50,000 divided by $100,000 = .50) you have a revolving utilization of 50%. That’s not great but it could be worse. The five unused cards are helping keep that percentage at 50% because of their completely unused credit limit.

So, what if someone tells you to close the other five credit cards that you are not using, and you do it?

What you’ve just done is eliminated those five cards from the equation. So, now you have to redo the math. Here goes…

Now you have five credit cards each with a limit of $10,000. That’s an aggregate credit limit of $50,000. Since those five cards are maxed out you are now 100% utilized ($50,000 divided by $50,000 = 1.00). Your credit scores just tanked.

Yes, this is an extreme example but even with fewer cards, lower credit limits and lower balances it will almost always lower your scores.

So what should you do now that you’ve just killed your credit scores? This is just a math problem. There are several ways to fix the damage, but they all have other negative side effects that you won’t able to avoid.

Re-open the five cards that you closed. It’s not that simple. When you go to re-open those five accounts the lender will pull your credit reports, which will result in five new inquiries. These inquiries will probably lower your scores. Also, it’s likely that they will report the accounts as being just opened so the fact that you have five brand new accounts on your report will also lower your scores.
Double the credit limits on the five cards that are still open. This is something that you’ll request, not demand. Your credit card issuers probably won’t agree to do this. And, as with the previous fix, doing this will result in the lender pulling your credit reports, which will again result in five new inquiries.
Pay down your balances by 50%. This will work and it will work without any negative credit scoring side effects. The problem is that how many of us have a spare $25,000 sitting around in the bank to correct our credit mistakes? And, even if you did have the money and chose to write the checks it would take at least 45 days for the payments to be posted to your credit reports.

[nineten]

The only reason one would want to lower credit limit or close the newer cards is that if they feel they aren't disciplined to exert self control on using them. 'In the long run' it would help if it kept them from abusing the credit and running into too much debt or bankruptsy. Some people can't control spending habits and it bites them in the rear later down the line with an overload of debt.

If one could put the card away in a locked box, not cancelling it, and not using it, that would be best.

There's still some people that believe that cutting up a card is ending their account when it's still actually active and a replacement can still be obtained.

Have you guys heard that some of the credit card companies can raise your interest rate if they find out you're late on other payments from other cards or installments? I've heard some news about this. It's like they really try to get us.

The car insurance companies, some of them and maybe Allstate, are going by credit reports also on how much debt a person has. They say you're a risk if you have too much debt because, for example, if you can't buy new tires and riding on old ones, it's an accident that can happen.

Some employers are now having applicants sign a permission form for a credit check, really, and factoring that into the hiring process.

[JennyM]

.
Some employers are now having applicants sign a permission form for a credit check, really, and factoring that into the hiring process.

BY LAW the ONLY way they can do this is if they are in a financial position. If your employer runs a credit report on you and they dont' hire you for a reason that has nothing to do with the job, they can get sued.