Keeping a good credit rating

[Snowflakey]

Hi everyone! Quick question for you. I am thrilled that I'm debt free. Such a good feeling after living paycheck to paycheck my whole life. I have quite a bit of credit cards and I'm starting to get notices saying "because you haven't used your card in a while, we are going to close your account". I heard this isn't good for your credit rating? I have a very good rating and would like to keep it that way. So, does that mean I have to use them every now and then to keep them active? I wish I could just close them all except a few but I know that isn't good either.

 

[5kidsmommy]

Good credit is partially based on credit age, so it's best not to close accounts. We try to use each of our cards occasionally and then pay them off in full. We do not carry balances from month to month but we've had some of our accounts for years. This is how we've kept our credit rating up.

 

[TippyThomas]

I just use a couple cards for gas and groceries each month. Pay them in full each month and that seems to keep my rating stable.

 

[china mom]

I agree with SKidsmommy fort he most part but I think one factor to consider is just how many cards you have and do any of them have an annual fee. Definitely keep the oldest one(s) active as age of credit is a huge factor. If they have an annual fee, call each year and ask them to waive the fee. I have never had a credit card company refuse.

Cancelling young cards should not have much affect on your credit.

Having no debt at all can actually lower your credit score. Showing that you can manage debt increases your score. If you don't trust yourself with debt, don't use it but if you can be disciplined, it is not a bad idea to use your cards and pay them off every month. We charge absolutely everything we can on our cards but paying credit card interest is consider a mortal sin in our household. You get even more points for installment loans such as mortgages and car loans. but obviously, you would not take out these loans just to take them out.

Edited to add: Congratulations on you successful credit journey!!

 

[tvguy]

I have been fortunate to always be able to maintain my credit score by just paying my bills. Only issue I face now is I have just one credit card, and I am concerned about being away from home and having it compromised, so I may apply for a second credit card. Other than that, at my age, I don't see any reason to even worry about my credit score since I don't know of a situation where I would need credit again.

 

[EACarlson]

For the best scoring ratio, you need three open revolving accounts (cards,) at least one of them reporting a balance and one open installment account (auto loan, mortgage, student loans, personal loan.) Closed accounts stay on your credit report for 10 years, so it's not going to hurt your score any if the lenders close accounts with a zero balance for a very long time. Even then the only two things that get hurt is Average Age of Accounts and Utilization. If you keep a low utilization on your open accounts and your cards are older than two years, it's not going to affect your score at all.

 

[Skippy918]

How many cards do you have? I would close the store cards first. I’d keep a visa and Mastercard and either a discover or Amex. Use them for gas, groceries, or online purchases. Pay off in full each month. Set a budget so you know how much you can charge each month and pay off.

 

[NannyBeBe]

I would not worry about closing credit card accounts affecting your credit score. Keep a Visa and a Discover, plus your debit card from your bank. We are debt free and have had a very high score for several years. Once in a while, our report says that our score is lower because we do not have any loans that we are paying off. That does not persuade us to go into debt just to raise our score.

 

[barkley]

I have been fortunate to always be able to maintain my credit score by just paying my bills. Only issue I face now is I have just one credit card, and I am concerned about being away from home and having it compromised, so I may apply for a second credit card. Other than that, at my age, I don't see any reason to even worry about my credit score since I don't know of a situation where I would need credit again.

beyond it being compromised-it could get screwed up by the hotel, resort or cruise line (looking at you mickey cuz you dun me wrong that time) which results in it getting locked down and credit card services either won't or can't help you resolve on your travel schedule (happened to us-freaking nightmare). always good to have a 2nd on reserve.

 

[barkley]

Hi everyone! Quick question for you. I am thrilled that I'm debt free. Such a good feeling after living paycheck to paycheck my whole life. I have quite a bit of credit cards and I'm starting to get notices saying "because you haven't used your card in a while, we are going to close your account". I heard this isn't good for your credit rating? I have a very good rating and would like to keep it that way. So, does that mean I have to use them every now and then to keep them active? I wish I could just close them all except a few but I know that isn't good either.

congrats!

what we do is hold a few different cards

-one we pay for all things (utilities, groceries, household stuff, gasoline...) paid in full each month (we call it our debit card that earns points)

-one i set up for all our auto pays (streaming, satellite, starlink...) paid in full each month and b/c it's only used for that purpose we can quickly spot a compromise/fraud

-a couple that are store specific but can be used elsewhere if needed in a pinch (stuff like costco and amazon)-since the only thing that's charged on them is from their specific store, it's again easy to monitor.

 

[tvguy]

beyond it being compromised-it could get screwed up by the hotel, resort or cruise line (looking at you mickey cuz you dun me wrong that time) which results in it getting locked down and credit card services either won't or can't help you resolve on your travel schedule (happened to us-freaking nightmare). always good to have a 2nd on reserve.

Yeah, we had an odd situation a couple of weeks ago. Drove 400 miles on a Friday, and some time while we were driving, the hotel we were staying out called and left a voicemail saying our credit card had been declined. My wife didn't get that voicemail until Monday. Not sure what happened because we checked in a few hours later no problem, and checked out no problem 2 days later. The charge popped onto my credit card on Monday morning, but that could have been an issue.
And yes, merchants can be the issue. Years ago I had my lowly little Mercury Sable in for repairs at the Lincoln Mercury and my credit card was declined. They quietly showed me the DECLINED on the screen, and ushered me into a back room with a phone to call my bank. While I was doing this another customer was declined, someone I suspect had enough money to buy the entire dealership. He was just about to lose his mind with the service advisor when I got off the phone where my bank told me that I hadn't been declined, the dealership had been declined. I came out and just repeated what my bank said, which defused the other guy from going crazy, but prompted a flurry of activity as the dealership tried to figure out what was wrong with their account.

 

[longboard55]

I use credit cards for everything possible and pay on line usually twice a month. Capital One has some nice money back cards, the savor card returns 4% on dining which we do a lot of. My credit rating is about as high as you can get. You really need credit, you never know when you will need it.

 

[Snowflakey]

OP Here - thanks everyone. I have no worry about misusing my credit cards. And I do use one to pay my internet/cable each month and just pay it off so I will continue to do that.

My issue is I have a TON of cards, probably 15 or 20! And I've had them all over 20 years at a minimum. I moved out at age 17, had my own condo and put myself through college. I lived off of credit cards sadly for most of my 20's through 40's. Sad I know but it helped my family live. Never, ever have I had one late payment either. Even though I had lots of debt I had good credit if that makes sense? Now I have excellent credit

Someone wrote if a lender closed my account it stays on my report for 10 years and really doesn't affect my score. If that's the case then I guess I'm all set because I will be 65 by then!

 

[LoveSpringsteen]

OP Here - thanks everyone. I have no worry about misusing my credit cards. And I do use one to pay my internet/cable each month and just pay it off so I will continue to do that.

My issue is I have a TON of cards, probably 15 or 20! And I've had them all over 20 years at a minimum. I moved out at age 17, had my own condo and put myself through college. I lived off of credit cards sadly for most of my 20's through 40's. Sad I know but it helped my family live. Never, ever have I had one late payment either. Even though I had lots of debt I had good credit if that makes sense? Now I have excellent credit

Someone wrote if a lender closed my account it stays on my report for 10 years and really doesn't affect my score. If that's the case then I guess I'm all set because I will be 65 by then!

Congratulations!!! I used to carry credit card debt and it gave me such peace of mind to get them paid off and I bet you felt the same way.

My experience with having one of our cards closed due to lack of use had very little, if any, impact on mine or my husband’s credit scores. I didn’t have as many dormant cards as you, so your experience may be different. We do have other active cards that we use and pay off each month plus our mortgage, so I’m sure that helps. As others have mentioned, you want to keep your oldest cards active if you can.

 

[Snowflakey]

Congratulations!!! I used to carry credit card debt and it gave me such peace of mind to get them paid off and I bet you felt the same way.

My experience with having one of our cards closed due to lack of use had very little, if any, impact on mine or my husband’s credit scores. I didn’t have as many dormant cards as you, so your experience may be different. We do have other active cards that we use and pay off each month plus our mortgage, so I’m sure that helps. As others have mentioned, you want to keep your oldest cards active if you can.

Peace of mind is exactly what it gave me. Can't express how "freeing" I now feel!! It's awesome.

 

[GAN]

OP Here - thanks everyone. I have no worry about misusing my credit cards. And I do use one to pay my internet/cable each month and just pay it off so I will continue to do that.

My issue is I have a TON of cards, probably 15 or 20! And I've had them all over 20 years at a minimum. I moved out at age 17, had my own condo and put myself through college. I lived off of credit cards sadly for most of my 20's through 40's. Sad I know but it helped my family live. Never, ever have I had one late payment either. Even though I had lots of debt I had good credit if that makes sense? Now I have excellent credit

Someone wrote if a lender closed my account it stays on my report for 10 years and really doesn't affect my score. If that's the case then I guess I'm all set because I will be 65 by then!

I would absolutely close most of them out ...whatever impact it has on your score will be insignificant(you'll still qualify for best rates if a loan is needed) and your score will bounce back over time. Credit card fraud is at an all time high -and having 15 cards that you'll probably rarely or never use leaves you at risk. And THAT could damage you credit score.

 

[LuvOrlando]

Opening new credit damages your number.
The ratio does a lot of damage so if you lost a job and needed credit, first, you won't get it and second, the ratio shift that would result from using credit will ruin you quickly.
I've been linking small monthly charges like for netflix, one for Instacart, one for Amazon, another for store curbside, another for incidentals etc to each card and making the rounds every month to sustain the limits and keep it going.

Back in 2008 when people lost their jobs the banks collapsed everyone's credit limits simultaneously wrecking everyone's credit scores by messing with the ratio of debt to available funds while building in heavy damage points of seeking credit in order to justify banks charging the highest interest possible. Nowadays, I am onto the game & spend a great deal of time experimenting on reverse engineering the algorithms. I make many small payments frequently through the month instead of one big one and do my best to make sure the dollar amount shrinks every month. It is more tricky than you'd think because some banks appear to deliberately hold off on reporting payments so they can report more owed than is owed and that triggers and instant dig in my scores which I watch closely in Annual Credit Reports which is still free once a week or so. Some banks actually seem to be holding off on even showing the charges an inordinate amount of time and push to the end of the month because you can't pay until the charge appears (unless you mail a check) and then with the lag on showing payments received they get to make it look like the consumer is using more than they are. Recently, I was offered an option to link utilities to your score to improve numbers which I did not do but I think many people did & this past year or so I noticed utilities do erratic things with payments so now I keep about a months worth of overpayments on all the utilities, better a credit on my account that showing late. It is such a scam IMO but I'll learn the ropes if I have to. Things are getting more aggressive lately and I suspect this is to drive people's scores lower in order to force higher interest rates on consumers for things like homes and student loan refinancing.

Hold the line if you can but don't let things close unless the costs are high to keep a card, my Spidey senses are tingling.

 

[slo]

Hi everyone! Quick question for you. I am thrilled that I'm debt free. Such a good feeling after living paycheck to paycheck my whole life. I have quite a bit of credit cards and I'm starting to get notices saying "because you haven't used your card in a while, we are going to close your account". I heard this isn't good for your credit rating? I have a very good rating and would like to keep it that way. So, does that mean I have to use them every now and then to keep them active? I wish I could just close them all except a few but I know that isn't good either.

That’s what I do when I get my notice. I take the card out of my desk, buy a tank of gas and then put the card back in my desk. Then I pay the bill in full when it comes and I don’t look at the card again until I get another notice.

I like having all my open credit in case there’s a massive purchase that needs to be made immediately. It’s my financial safety blanket, along with being good for my credit score, which is fantastic after being very financially irresponsible in my younger days.

ETA…..I did close all but 2 store cards. I still have Kohls and Amazon

 

[EACarlson]

Opening new credit damages your number.
The ratio does a lot of damage so if you lost a job and needed credit, first, you won't get it and second, the ratio shift that would result from using credit will ruin you quickly.
I've been linking small monthly charges like for netflix, one for Instacart, one for Amazon, another for store curbside, another for incidentals etc to each card and making the rounds every month to sustain the limits and keep it going.

Back in 2008 when people lost their jobs the banks collapsed everyone's credit limits simultaneously wrecking everyone's credit scores by messing with the ratio of debt to available funds while building in heavy damage points of seeking credit in order to justify banks charging the highest interest possible. Nowadays, I am onto the game & spend a great deal of time experimenting on reverse engineering the algorithms. I make many small payments frequently through the month instead of one big one and do my best to make sure the dollar amount shrinks every month. It is more tricky than you'd think because some banks appear to deliberately hold off on reporting payments so they can report more owed than is owed and that triggers and instant dig in my scores which I watch closely in Annual Credit Reports which is still free once a week or so. Some banks actually seem to be holding off on even showing the charges an inordinate amount of time and push to the end of the month because you can't pay until the charge appears (unless you mail a check) and then with the lag on showing payments received they get to make it look like the consumer is using more than they are. Recently, I was offered an option to link utilities to your score to improve numbers which I did not do but I think many people did & this past year or so I noticed utilities do erratic things with payments so now I keep about a months worth of overpayments on all the utilities, better a credit on my account that showing late. It is such a scam IMO but I'll learn the ropes if I have to. Things are getting more aggressive lately and I suspect this is to drive people's scores lower in order to force higher interest rates on consumers for things like homes and student loan refinancing.

Hold the line if you can but don't let things close unless the costs are high to keep a card, my Spidey senses are tingling.

Almost all lenders report once a month and only once a month. Generally a few days after the statement closes. The only really notable exception is Chase, which will report anytime your account has a 0 balance. If you really want to get into the weeds on how the algorithm works and the differences in the three bureaus. https://ficoforums.myfico.com/ is a fantastic resource.

 

[NotUrsula]

I'm no expert, but I also once had a lot of cards like that, in some cases more than one issued by the same bank due to business buyouts and merchant changes. I *believe* that asking a bank to consolidate multiple lines of credit into one account does less to hurt you than full account closure. Also, there should be a note on any closure that you ask for, that says something like "closed at account holder's request", which makes it clear that it was not closed for failure to pay.

All of the cards I have now I use for everyday purchases like gasoline and toiletries, all of them are reward cards, and all of them are paid off in full each month by automatic payment. I use an Amazon card for gasoline, and earn enough back to cover nearly all my Amazon purchases that way, including the Prime fee, which gives me a painless way to pay for movie streaming.

(BTW, never use a debit card at a gasoline pump; skimmers are too much of a risk. A credit card is not nearly as risky because there are loss limits in place once the theft is discovered. Just set it to automatically pay off every month.)