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Credit history and credit rating impact information
Tuesday, Oct 9, 2007
Question:
1) Does having too many credit cards affect my credit history in a bad way?
2) Does requesting for an increase in credit line on a certain credit card affect my credit history in a bad way?
3) What is the ideal number of credit cards to have and still maintain a good credit history?
4) Does it matter how much credit line i have on each of them?
Please let me know ...Thanks a lot !!!
1. If you carry a balance on your cards, you will likely use the cards with the better finance charge up to the credit limit while leaving the others in the dresser drawer with little or no balance. Depending on the available credit lines of the various accounts, this situation could hurt your score because you may end up with an unfavorable DEBT to AVAILABLE CREDIT ratio. Professionals in the credit industry have told me that, all things considered, the optimum number of bank cards is four with each carrying a maximum debt to available credit ratio of 1/3 (so if your credit line on one card is $10,000... don't carry more than about $3,000
on that card).
Choose the 4 cards with the best rate, no membership or annual fee and cash back rewards. If you receive a credit offer with better terms than one of your four accounts, you can balance transfer the debt on the less favorable card to the more favorable card. However, you should avoid closing cards with a long favorable credit history, as positive payment history has a positive influence on your credit score.
2. Requesting an increase in credit limit may improve your score if you carry a balance. Remember the debt to available credit ratio that I just wrote about? The increase in credit limit may favorably affect that ratio if you currently have a high debt to available credit ratio. Be careful not charge up the new credit limit and carry new, higher balance or the improvement will be short-lived.
3. As stated before, the number of cards
Choose the 4 cards with the best rate, no membership or annual fee and cash back rewards. If you receive a credit offer with better terms than one of your four accounts, you can balance transfer the debt on the less favorable card to the more favorable card. However, you should avoid closing cards with a long favorable credit history, as positive payment history has a positive influence on your credit score.
2. Requesting an increase in credit limit may improve your score if you carry a balance. Remember the debt to available credit ratio that I just wrote about? The increase in credit limit may favorably affect that ratio if you currently have a high debt to available credit ratio. Be careful not charge up the new credit limit and carry new, higher balance or the improvement will be short-lived.
3. As stated before, the number of cards
that you have active does not directly factor into your score number, but the credit history, that is, the accumulated average of how you pay, the amount you pay, when you pay, etc. on each card or any line of credit certainly does. Remember to carry cards with the best rate and the best service and keep the available credit on each high. Ideally, at least 2/3 (or best of all... don't carry any balance from month to month) of your available credit line should be free on each card.
4. Yes, it matters as explained above. Again, try not to carry any debt from month to month if you can help it. Paying off your accounts each month will save you a lot in interest.
If you would like more information or would like to hire the services of a credit repair professional, please visit our credit resource page at: http://www.bills.com/credit/
Best of luck,
Bill
www.bills.com
4. Yes, it matters as explained above. Again, try not to carry any debt from month to month if you can help it. Paying off your accounts each month will save you a lot in interest.
If you would like more information or would like to hire the services of a credit repair professional, please visit our credit resource page at: http://www.bills.com/credit/
Best of luck,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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