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Thread: To Preserve Credit Score, Don't Leave Credit Cards Unused

  1. #1

    To Preserve Credit Score, Don't Leave Credit Cards Unused

    You'll have more debt. but your credit score will be higher!! Great thinking, Mega Banks!!

    QUESTION:
    Dear Credit Score Report,
    I have four credit cards. One for work expenses, one for personal expenses, a specific store card and then one other. This other card does not get used and has a zero balance. Does this hurt my credit score to have this credit card with zero activity? Would it hurt my credit score more if I closed this account? -- Beth

    ANSWER: Hey Beth,
    If your primary goal is maintaining your credit score, you should leave that extra card open -- but not unused.

    Based on the list of cards in your wallet, I'd guess the card with zero activity is one you keep in case of emergencies. Having an emergency card is a smart move, since that plastic could come in handy when an unexpected event catches you without enough cash. Therefore, unless that extra card is causing legitimate problems -- such as charging you an annual or inactivity fee, causing excessive temptation to spend or posing identity theft concerns -- there probably isn't a good reason to close that account. After all, "a zero balance on a credit card account won't hurt your FICO score," but closing an account could, says Craig Watts, spokesman for FICO (NYSE: FICO - News), creator of the most commonly used credit score.

    [Click here to check current credit card offers, including rates and terms.]

    If you continue not to use the card, however, the bank may cancel it for you. That's because "eventually the card issuer will close the account due to inactivity," says Watts, since keeping the account open costs the lender money. A look back over recent months confirms that lenders have been very willing to close accounts in an effort to protect their profits. Alternately, the card issuer could "begin demanding that the consumer charge X amount to keep it open," says Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling.

    http://finance.yahoo.com/banking-bud...-creditreports



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  3. #2
    You don't want to run them up- just use them once in a while and pay them off when the bill comes. Part of your score is what percent of available credit you currently use- the higher percent, the higher your score.

  4. #3
    Quote Originally Posted by Zippyjuan View Post
    You don't want to run them up- just use them once in a while and pay them off when the bill comes. Part of your score is what percent of available credit you currently use- the higher percent, the higher your score.
    Exactly.


    Be very careful with Capital One credit cards. They don't report your credit line, so credit agencies have nothing to go off of other than your "highest balance." If you do get a Capital One credit card, I recommend using one of the "purchase checks" they send you to write a check to yourself for 90%+ of your credit limit. Then the next month just pay it off with the proceeds.

  5. #4
    Dont use credit and you wont need credit score.

  6. #5
    Quote Originally Posted by Zippyjuan View Post
    You don't want to run them up- just use them once in a while and pay them off when the bill comes. Part of your score is what percent of available credit you currently use- the higher percent, the higher your score.
    Just to clarify, the LOWER your utilization percentage (total credit lines vs total balances: $5000 line with $2000 balance is 40% utilization pct, eg) the higher your score. Your last sentence makes it sound like higher balances are good for your credit score. I know that's not what you meant...
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    But now you can't talk to people because of "social distancing"....brought to you by shills and politicians.

  7. #6
    Quote Originally Posted by hugolp View Post
    Dont use credit and you wont need credit score.
    Not a problem if you are never going to buy a house, car, or start a business.

  8. #7
    I still don't see the point of keeping up a credit card to go into more debt. The key is to save like a fiend until you have enough not to need them. Save up more than the 20% down payment needed for most mortgages--you will get one just as easy as if you have great credit. Never take a loan out for a car, buy used up front.

    Because mortgages and student loans are nearly unavoidable for most people, making payments on these is good enough to give you some sort of credit history. Screw the credit card. The interest rates are appalling these days, and it only seems like a carrot to lead to more debt.

  9. #8
    Quote Originally Posted by brandonyates View Post
    Not a problem if you are never going to buy a house, car, or start a business.
    Not necessarily true unless you intend to comply with government mandates. At any rate, I've still never used credit in my life.... but I live in the back of an industrial/commericial/residential building with half a roof, a collapsing ceiling, and a 1/3-working toilet.... among other things.



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  11. #9
    Quote Originally Posted by Lovecraftian4Paul View Post
    I still don't see the point of keeping up a credit card to go into more debt. The key is to save like a fiend until you have enough not to need them. Save up more than the 20% down payment needed for most mortgages--you will get one just as easy as if you have great credit. Never take a loan out for a car, buy used up front.

    Because mortgages and student loans are nearly unavoidable for most people, making payments on these is good enough to give you some sort of credit history. Screw the credit card. The interest rates are appalling these days, and it only seems like a carrot to lead to more debt.
    Just because you have a credit card doesn't mean you have to carry a high balance every month. If you pay it off every month, ou are charged no interest and you usually end up getting some reward just for using the card. Plus, the longer you have it the higher your limit goes and you can protect yourself in an emergency.

    It is not realistic to save up money for everything you need beforehand and have savings to cover any unforseen event that may come about. It is good to have as much credit available as possible.

  12. #10
    Quote Originally Posted by Kludge View Post
    Not necessarily true unless you intend to comply with government mandates. At any rate, I've still never used credit in my life.... but I live in the back of an industrial/commericial/residential building with half a roof, a collapsing ceiling, and a 1/3-working toilet.... among other things.
    sounds like you qualify for a home loan. there is a subprime teaser rate made exactly for the person with prestine credit such as yourself.
    don't let poverty get in the way of obtaining slavery through debt.
    rewritten history with armies of their crooks - invented memories, did burn all the books... Mark Knopfler

  13. #11
    Quote Originally Posted by torchbearer View Post
    sounds like you qualify for a home loan. there is a subprime teaser rate made exactly for the person with prestine credit such as yourself.
    don't let poverty get in the way of obtaining slavery through debt.
    I don't think so... If I made it known it was a home (um, or brought any attention to the building at all), the government would probably condemn it.

    At any rate, I'm still kind of a slave - through repression -- I guess it's ironic I used to preach against it all the time. There's a fellow who works there and we're terrified of each other.

    I'm terrified of him because he's an angry schizophrenic sign-painter who has, on occasion, started chucking stuff throughout the building and yelling at his wife... who was not in the building. He's terrified of me because he once walked in my room and saw where I had written "GOD BLESS AMERICA!" in my blood on the wall.


    .... Mmm. This is going to go off-topic, isn't it...? Just like old times!

  14. #12
    Quote Originally Posted by Kludge View Post
    I don't think so... If I made it known it was a home (um, or brought any attention to the building at all), the government would probably condemn it.

    At any rate, I'm still kind of a slave - through repression -- I guess it's ironic I used to preach against it all the time. There's a fellow who works there and we're terrified of each other.

    I'm terrified of him because he's an angry schizophrenic sign-painter who has, on occasion, started chucking stuff throughout the building and yelling at his wife... who was not in the building. He's terrified of me because he once walked in my room and saw where I had written "GOD BLESS AMERICA!" in my blood on the wall.


    .... Mmm. This is going to go off-topic, isn't it...? Just like old times!
    old times indeed.
    have you tried sharing a blunt with the guy?
    rewritten history with armies of their crooks - invented memories, did burn all the books... Mark Knopfler

  15. #13
    Quote Originally Posted by brandonyates View Post
    Not a problem if you are never going to buy a house, car, or start a business.
    Pay outright...
    We will be known forever by the tracks we leave. - Dakota


    Go Forward With Courage

    When you are in doubt, be still, and wait;
    when doubt no longer exists for you, then go forward with courage.
    So long as mists envelop you, be still;
    be still until the sunlight pours through and dispels the mists
    -- as it surely will.
    Then act with courage.

    Ponca Chief White Eagle

  16. #14
    Quote Originally Posted by moostraks View Post
    Pay outright...
    Many investments lose their appeal without leverage.

  17. #15
    Quote Originally Posted by moostraks View Post
    Pay outright...
    Yea no problem, I'll just save up $250,000 while paying rent at the same time. That shouldn't take me more than....30-40 years. I'll still have a couple years to live in my house before my children send me to a nursing home.

  18. #16
    Quote Originally Posted by brandonyates View Post
    Not a problem if you are never going to buy a house, car, or start a business.
    I thought Ron Paul people were against debt and borrowing.



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  20. #17
    Quote Originally Posted by WaltM View Post
    I thought Ron Paul people were against debt and borrowing.
    You thought wrong.

  21. #18
    Quote Originally Posted by brandonyates View Post
    Yea no problem, I'll just save up $250,000 while paying rent at the same time. That shouldn't take me more than....30-40 years. I'll still have a couple years to live in my house before my children send me to a nursing home.
    you're assuming you pay just your mortgage.
    Isn't the whole reason we had a housing bubble, because we had spoiled kids who think they're smart and "would rather pay my own mortgage than somebody else's"?

    you're assuming that your house won't depreciate.
    what if the 250,000 house you want today 10 years down the road becomes 125,000? (did this not happen to many bubble suckers, in less than 5 years?)

    In 10 years, would you not be able to save 120,000 if you saved $1000 a month?
    (this is not counting you can invest your savings in some business, making 2-5% a year at worst)

    And how much do you save by not having kids?
    What good are kids if they're going to send you to a nursing home?

    According to
    http://www.amortization-calc.com/

    a 250,000 loan, at 6.5% interest, will cost you 200,000 in interest for 20 years.
    Or $300,000 for 30 years.
    $140,000 if you pushed it into 15 years.
    (seems like on average, $800 a month in any case)

    Paying it off in 15 years is still $2200 a month.
    Hey, at least that's not throwing any money away to the landlord!
    Last edited by WaltM; 05-08-2010 at 10:50 AM.

  22. #19
    Quote Originally Posted by WaltM View Post
    you're assuming you pay just your mortgage.
    Isn't the whole reason we had a housing bubble, because we had spoiled kids who think they're smart and "would rather pay my own mortgage than somebody else's"?
    So wanting to own your own home makes you a "spoiled kid?"


    you're assuming that your house won't depreciate.
    what if the 250,000 house you want today 10 years down the road becomes 125,000? (did this not happen to many bubble suckers, in less than 5 years?)
    No I'm not. I didn't make any assumptions anywhere in this thread.


    In 10 years, would you not be able to save 120,000 if you saved $1000 a month?
    [Off topic rant about kids ignored and removed]

    According to
    http://www.amortization-calc.com/
    Yea possibly. What's your point?


    a 250,000 loan, at 6.5% interest, will cost you 200,000 in interest for 20 years.
    Or $300,000 for 30 years.
    $140,000 if you pushed it into 15 years.

    Paying it off in 15 years is still $2200 a month.
    Hey, at least that's not throwing any money away to the landlord!
    [/quote]


    There are several things here you are missing, and your knowledge is rudimentary at best. You really should be a little more knowledgeable about things before trying to call someone out and debate. Allow me to shed some light on this for you.

    Mortgage payments are in many cases comparable to the amount a rent payment would be for a similar abode. However mortgage interest payments and property tax can be written off as federal tax deductions giving you a nice chunk of that back. After 30 years, you own your home. After 30 years of renting you own nothing.

    Furthermore, as inflation continues year after year, rental rates will continue to increase (They will fluctuate, but ultimately go up.) However your mortgage payment is set in ston(assuming you have a fixed interest rate) and you know exactly what your payment is year after year. Your home may increase in value, it may not...it doesn't matter much.


    Ultimately, only a fool would continue to rent when he is in a position to get a mortgage at a similar price.

  23. #20
    I agree with Yates.

    One of the biggest advantages to purchasing a home with a mortgage, rather than renting at a similar (definitely higher) cost is that you're building equity at the same time. Also, interest payments on your first home can be written off against your income.

    If you're in a 28% tax bracket with a mortgage at 6% you're really only paying 4.32%. That's less than the US government and almost all AAA-rated corporations pay to borrow. And since you, WaltM, say you can earn 2-5% investing in "some business" bare minimum, why wouldn't it make sense to borrow at an effective 4.32% and lend at 5%?

    If you're in a position to buy, even with a mortgage, it's a better deal financially all the way around.


    Off topic: The financial advice given in the subforum sucks ass. For such a generally intelligent forum when it comes to politics, theory, and natural rights philosophy, we really drop the ball when it comes to the almighty dollar.
    Last edited by Jordan; 05-08-2010 at 11:26 AM.

  24. #21
    Quote Originally Posted by Jordan View Post
    I agree with Yates.

    One of the biggest advantages to purchasing a home with a mortgage, rather than renting at a similar (definitely higher) cost is that you're building equity at the same time. Also, interest payments on your first home can be written off against your income.

    If you're in a 28% tax bracket with a mortgage at 6% you're really only paying 4.32%. That's less than the US government and almost all AAA-rated corporations pay to borrow.

    If you're in a position to buy, even with a mortgage, it's a better deal financially all the way around.
    You could also account for inflation to counter interest payments. If your $200k loan is depreciating over 3% in value each year, a 4.32% interest rate is almost insignificant.

  25. #22
    Quote Originally Posted by Kludge View Post
    You could also account for inflation to counter interest payments. If your $200k loan is depreciating over 3% in value each year, a 4.32% interest rate is almost insignificant.
    Good to see you're back.

  26. #23
    Quote Originally Posted by brandonyates View Post
    So wanting to own your own home makes you a "spoiled kid?"
    Wanting to own not knowing the exact consequences or possible scenarios is spoiled, yes.

    No I'm not. I didn't make any assumptions anywhere in this thread.
    Ok, so you don't assume it, that means you're open to it, which makes saving $250,000 a BS goal.

    Yea possibly. What's your point?
    Oh, I'm sorry, did you not see that I said your dream home could cost $125K sometime later? In which case, if you saved $120K in 10 years, you can pay it in full?

    There are several things here you are missing, and your knowledge is rudimentary at best. You really should be a little more knowledgeable about things before trying to call someone out and debate. Allow me to shed some light on this for you.

    Mortgage payments are in many cases comparable to the amount a rent payment would be for a similar abode. However mortgage interest payments and property tax can be written off as federal tax deductions giving you a nice chunk of that back. After 30 years, you own your home. After 30 years of renting you own nothing.
    How much exactly is that chunk?
    Can you, for the sake of arguing, give me a number, if for example we're talking about a $250K house, costing you overall $550K after interest.

    After 30 years, I own my house and wasted $300K to a bank, where as after renting 30 years I could buy a trailer, or a smaller house, or use what I saved to live on. (besides, you think I can't negotiate a lower rent if I rented the same place over many years?)

    Furthermore, as inflation continues year after year, rental rates will continue to increase (They will fluctuate, but ultimately go up.) However your mortgage payment is set in ston(assuming you have a fixed interest rate) and you know exactly what your payment is year after year. Your home may increase in value, it may not...it doesn't matter much.
    Inflation will always increase? Tell that to the bubble bursters in this recession!
    You may know what you are expected to pay, but you're also assuming you'll have a steady income, income doesn't always increase with inflation.

    I beg to differ, your home increasing in value should be the ONLY reason to buy it.
    Throwing money away to the bank is no different than throwing it away to the landlord.


    Ultimately, only a fool would continue to rent when he is in a position to get a mortgage at a similar price.
    I agree.
    But isn't a mortgage that's a similar price to rent, ultimately the result of cheap credit or overpriced rent (and would eventually separate)?

    I know many fools who bought their houses within 5 years, laughing at us for renting, now realized their "investment" is 40-50% less than what they owe.

    Speaking of this, rent also fluctuates due to supply & demand.
    What's wrong with saying you save money by not having kids?

  27. #24
    Quote Originally Posted by Jordan View Post
    I agree with Yates.

    One of the biggest advantages to purchasing a home with a mortgage, rather than renting at a similar (definitely higher) cost is that you're building equity at the same time. Also, interest payments on your first home can be written off against your income.

    If you're in a 28% tax bracket with a mortgage at 6% you're really only paying 4.32%.
    Ok.
    6%-4% may look like 2% savings to you.
    But it looks like 4% wasted to me.


    That's less than the US government and almost all AAA-rated corporations pay to borrow. And since you, WaltM, say you can earn 2-5% investing in "some business" bare minimum, why wouldn't it make sense to borrow at an effective 4.32% and lend at 5%?
    No, it wouldn't make sense.

    Because people who are so smart at math usually don't bother.
    And people who are so hung on owning a house don't think mathematically.
    Why let one come in, one go out, just to earn less than 1%?


    If you're in a position to buy, even with a mortgage, it's a better deal financially all the way around.
    I agree.

    And while there's no easy way to foresee the future, I'm open to all options, rather than a 30 year committment.

    Off topic: The financial advice given in the subforum sucks ass. For such a generally intelligent forum when it comes to politics, theory, and natural rights philosophy, we really drop the ball when it comes to the almighty dollar.



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  29. #25
    Quote Originally Posted by Kludge View Post
    You could also account for inflation to counter interest payments. If your $200k loan is depreciating over 3% in value each year, a 4.32% interest rate is almost insignificant.
    even if you broke even, or earned some, is it worth your time?

  30. #26
    Quote Originally Posted by WaltM View Post
    even if you broke even, or earned some, is it worth your time?
    No, but I live Simpler than most Quakers.

  31. #27
    brandonyates, let me ask you.

    What's the difference between a person paying
    $550k in 30 years (for a house that's worth $250k), and owning it, debt free.

    And a person who rented 30 years, and saved $300K?

    If the house is now worth $600K, the buyer wins.
    If the house is now worth $150K, the renter can own, with $150K in hand.

    Why is it people believe our country can or will continue to extend credit and depreciate our currency?
    Last edited by WaltM; 05-08-2010 at 11:47 AM.

  32. #28
    Quote Originally Posted by WaltM View Post
    Ok.
    6%-4% may look like 2% savings to you.
    But it looks like 4% wasted to me.
    That makes no sense.

    Quote Originally Posted by WaltM View Post
    No, it wouldn't make sense.

    Because people who are so smart at math usually don't bother.
    And people who are so hung on owning a house don't think mathematically.
    Why let one come in, one go out, just to earn less than 1%?
    We can think mathematically, so why don't we.

    Why let one come in, one go out, just to earn less than 1%? Uh, I don't know. Ask the thousands of banks that borrow at one rate, lend at a slightly higher rate, and make billions each year. OPM baby!



    Quote Originally Posted by WaltM View Post
    I agree.

    And while there's no easy way to foresee the future, I'm open to all options, rather than a 30 year committment.
    Houses aren't liquid, but they aren't horribly illiquid either. Sure, there may be a ton of real estate on the market right now, and homes aren't selling like hot cakes, but they can be liquidated. I'm sure you know you can buy a house with a mortgage and sell it before you pay it off.

  33. #29
    Quote Originally Posted by WaltM View Post
    brandonyates, let me ask you.

    What's the difference between a person paying
    $550k in 30 years (for a house that's worth $250k), and owning it, debt free.

    And a person who rented 30 years, and saved $300K?

    If the house is now worth $600K, the buyer wins.
    If the house is now worth $150K, the renter can own, with $150K in hand.

    Why is it people believe our country can or will continue to extend credit and depreciate our currency?
    For some reason you seem to be totally overlooking the fact that while you are saving up money to buy a house you are also spending money on rent.

    Extending credit doesn't depreciate a currency. Credit is a cornerstone of a healthy economy. I'm done arguing in here though...I feel like I'm talking to a brick wall.

  34. #30
    I shouldn't need my credit score for anything. Of course, now people check it for everything from renting an apartment to getting a job... but that's a problem for another day.

    I don't need a car, but if I ever do, I'll just go buy one. I don't want to get a mortgage/home, because I don't really see myself staying put for any prolonged period of time. I am a nomad and I love it. I don't get people who commit to a home for 15-30 years. I've never seen a neighborhood that stays worthwhile that long, personally, but if you do that's great

    I don't have any credit cards, and I doubt anyone would extend me the offer of one. That is just the way I like it.

    Ultimately, only a fool would continue to rent when he is in a position to get a mortgage at a similar price.
    ...or someone who doesn't want to pick a place and be stuck there. I'm such a fool! As for paying outright, there's no rule that states you need a $250,000 home. You can go for that, and you can have your mortgage, and do whatever you want, whichever way you want, but I certainly know a lot of people with spectacular homes who put far less than that into building them. I have seen my fair share of log homes, especially, that put the prefab cookie cutter 1/4 mil homes to shame You don't have to plunk down $250,000 to have a home, and you can certainly invest in a house whose initial value is far less, pay it outright, and make your "payments" via improvements you put into it every year. That certainly isn't for everyone, either.

    As for the contention that Ron Paul supporters are entirely against debt/borrowing... that's idiotic. You do not start businesses or make large purchases without investment and borrowing. Of course, responsibility is the key. There was a time when ONLY your really big purchases were financed, and you thought things over a great deal before getting into such an obligation. Even financing a vehicle was something to consider very seriously, and you saved up for a long time or borrowed from family to get a large down payment on a house, so you wouldn't be in debt for ages.

    The trouble now is that people finance everything. Hell, people put a cup of coffee on their credit card. People finance crappy furniture they can't afford. People finance their car insurance payments and their gasoline and their food and their vacations. This becomes spending money you not only don't have, but are unlikely to ever have, and that is what the very vast majority of us are going to object to.

    Oh and I agree that not having kids is an excellent savings plan
    Genuine, willful, aggressive ignorance is the one sure way to tick me off. I wish I could say you were trolling. I know better, and it's just sad.

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