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Credit rating question -- which is better option to improve score?...

by TimothyW
6 replies
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A friend of mine (seriously, this is not about me -- it really is for a friend)...

Ok -- so she has several credit cards (7+ I think).
She has an *excellent* credit score. 700+
She came into some money -- so she paid off almost all of her credit cards.

So... she now has 4 options, and the question is -- which option will be best for boosting her credit score?

1) She keeps all the paid-off cards open, "blank" + empty.
2) She calls those paid-off cards and cancels/closes them.
3) She keeps the empty cards, and puts *some money* on them (maybe 10% of the limit) -- I heard somewhere that partially filled CCs are better than totally empty CCs, in terms of boosting credit score. True -- or not?

4) Do some kind of combo of the above options.

So... anyone have any recommendations on which options are best.
Overall goal is to boost her already high credit score.

Thanks!

-- TW
  • Profile picture of the author lanfear63
    Mr Magic

    Bottom line, the more you take out credit and pay it back, the more likely you are to increase your score. so use the cards (but pay them back)

    In the UK I worked in a store and this guy in his 60's and his wife took out a credit agreement on a purchase. It was declined. He was well to do and had no debts. Thing is, he was also someone who had no credit cards (other than a debit card) as he always paid cash up front. He had no need for cards. In order to get more credit you must have a good credit history.

    PS. He ended up paying cash.
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  • Profile picture of the author seasoned
    Originally Posted by TimothyW View Post

    A friend of mine (seriously, this is not about me -- it really is for a friend)...

    Ok -- so she has several credit cards (7+ I think).
    She has an *excellent* credit score. 700+
    She came into some money -- so she paid off almost all of her credit cards.

    So... she now has 4 options, and the question is -- which option will be best for boosting her credit score?

    1) She keeps all the paid-off cards open, "blank" + empty.
    2) She calls those paid-off cards and cancels/closes them.
    3) She keeps the empty cards, and puts *some money* on them (maybe 10% of the limit) -- I heard somewhere that partially filled CCs are better than totally empty CCs, in terms of boosting credit score. True -- or not?

    4) Do some kind of combo of the above options.

    So... anyone have any recommendations on which options are best.
    Overall goal is to boost her already high credit score.

    Thanks!

    -- TW
    Yu want the straight scoop? HERE it is! NEVER owe 30% or more. Have GOBS of credit, but NEVER use more than 30% on any card and NEVER more than X dollars! What is X? GOOD LUCK finding out! You should NEVER have more than Y cards! If you DO close accounts, make sure it is listed as done by YOU, and that they are NEWER cards, butyou must have a history on them. If you get a card, and quickly close it, they may find it suspicious. Such things CAN hurt your credit! The FICO score is full of some nasty garbage that ASSUMES you are GUILTY! VANTAGE isn't any better.

    NOW, aren't you glad you asked?

    Steve
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  • Profile picture of the author yukon
    Banned
    Originally Posted by TimothyW View Post

    A friend of mine (seriously, this is not about me -- it really is for a friend)...

    Ok -- so she has several credit cards (7+ I think).
    She has an *excellent* credit score. 700+
    She came into some money -- so she paid off almost all of her credit cards.

    So... she now has 4 options, and the question is -- which option will be best for boosting her credit score?

    1) She keeps all the paid-off cards open, "blank" + empty.
    2) She calls those paid-off cards and cancels/closes them.
    3) She keeps the empty cards, and puts *some money* on them (maybe 10% of the limit) -- I heard somewhere that partially filled CCs are better than totally empty CCs, in terms of boosting credit score. True -- or not?

    4) Do some kind of combo of the above options.

    So... anyone have any recommendations on which options are best.
    Overall goal is to boost her already high credit score.

    Thanks!

    -- TW

    I would cancel all the cards, cut everyone one of those credit cards up & burn them in the fireplace.

    Look at the risk vs reward, temptation already lead to digging one hole, where's the money going to come from next time those cards are maxed out just because they exist?

    Cut the cards up & move on with more self control.
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  • Profile picture of the author agc
    Her score is over 700, why the f does she care if it gets higher? Seriously, cancel the cards, get ONE line of credit at a reasonable rate and keep it available at all times for emergencies, and never pay obscene interest ever again.

    I think my emergency LOC is @4%. But I kinda used it to pay cash for another rental property that I'm making 25% on, so I'm not in any hurry to pay it back off. But I will eventually when I run out of decent ways to keep my cash invested.
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    • Profile picture of the author Midnight Oil
      I think you should check out those subjects at ClarkHoward.com and DaveRamsey.com. Sure, you'll see ads and they sell stuff, but dig around in the actual topics sections. I've used information from both over the years, via their radio shows or columns or books, to successfully get some things squared away.

      Others here may have similar resources to post.
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      • Profile picture of the author Kay King
        Suze Orman's site, too....or suggest your friend talk to a financial planner or CPA.

        She can mess up her credit quickly by cancelling open credit lines (changes debt to income ratio) and though she has more accts than she probably needs, deciding which ones to close should be done carefully and with the right factual information.

        750 and above is "excellent" credit....credit rating can determine what you pay for insurance, interest rates and even rent in some areas. Trying to "manage credit rating" can be risky unless you understand the industry - so expert advice or gaining knowledge is important.

        EDIT**

        I missed this line on first reading:

        She came into some money -- so she paid off almost all of her credit cards.
        Puts a different spin on the entire question. Was her credit debt high or hard to manage before she "came into some money"? If so, very good chance that debt will begin to build again if she keeps the accts open.
        I'd send her to a money pro for a 1-2 hr meeting to chart a plan forward and make sure she stays out of debt and closes accts without affecting her CR.
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