Originally Posted by BrokenTusk
He's right, I have excellent credit but I had an 8 grand loan out plus my truck loan. When i went to consolidated just to save a lil on interest they insisted I closed my 2nd and 3rd Credit cards because of the potential risk. all 3 of my cards had a 5 grand limit but I hadn't carried a balance on the last 2 in 4 years. Never used em so i didn't care about closing em.
On a side note, I opened them for those 15,000 points deals if you open a card. when they closed them out, they paid me out the points balance on both cards. worked out to be a free 200$.
I belong to a credit reporting service that gives advice on how to improve your credit score. Having a $5K limit with nothing on it is actually better for your credit score. If you have too many then it's could be bad because there's a risk that you'll use the credit all at once and leave the bank hanging. But you should have one or two with a large limit and a low balance because it shows you as a responsible credit user.
If you have a smaller card but use more than 50% of the allowable balance, that can also hurt your score.
So if you have one credit card with $2500 limit but with a 50% balance and one credit card that's $5000 limit and no balance, you should transfer the balance to the $5K card and close the $2500 card.
Also, it's good to have a high limit card remain open for more than 2 years. A $5K card with no balance that has been open for two years or more is one of the best things for your credit score.
Things that can hurt your score include:
- Too many inquiries; it looks like you're shopping for credit.
- Balances too high on revolving accounts (credit cards).
- Using more than 50% of your available credit on a revolving account.
- Using too much of your total available credit.
- Getting your financing through financing companies vs a bank or credit union. This one is especially bad with one of them (Equifax, I believe) because it never comes off your report. I have one from 25 years ago that still brings my score down with them.
- Using less than 10% of your available balance on revolving accounts.
- Never late on a payment.
- High average available credit (>=$5K).
- Revolving account open for more than 2 years (shows your reliability over time).
Car loans don't effect it too much because it's a secured loan. I did a what-if scenario. I had money to pay off my car or pay off my credit cards. Paying off the car had little effect on my credit score. Paying off the credit cards bumped my score by 22 points.