Cancel or keep card?

[mikemike]

MY question is:
I have a bestbuy mastercard and it was the first card i got approved by after BK. My limit is only $100. I carry balances every month just so i have something to pay. Now i have 3 more cc. Two Capone cards one with a $450 limit which is a secured card and the other with $750 limit. I just recently got approved for the Barclays card for 1295 odd number. So now im wondering if this very low limit bb card is hindering my credit score? I dont want to cancel it for the simple fact its the oldest card. Keep or trash it? Ive tried requesting for a credit increase but they not giving any out. Maybe cancel it and re-apply later on?

[mountanddo]

If you are paying on the card and it is reporting that way I wouldn't cancel the card. Maybe just not use it. It's only $100 credit so it's not really hindering your maximum credit limit if the card balance is $0.

[AngelinaCatHub]

Cancelling the card will do more damage to your credit than the max amount. Hold on it and when it ages a bit, you may call their customer service and request the amount raised. This they can do without changing your car. Use them once a month and pay them off before interest. This is recommended by Clark Howard to rebuild credit. 'Hub

[df04527]

That is correct Hub. Agreed.

[Logan]

Why do people pay interest to these credit card companies?

[IBroke]

So now im wondering if this very low limit bb card is hindering my credit score?

The credit-limit as an AMOUNT is not considered by the FICO-models. Score-wise, it simply doesn't matter if you carry a $3-balance on a card with a $100 limit or a $300-balance on a card with a $10,000 limit. 3% are 3%.
It would be hindering if you would carry a balance on this account as well - especially if it would exceed $8. And you can still use the card - just make sure you pay it off prior to the closing (reporting)-date.

[IBroke]

Maybe cancel it and re-apply later on?

Not a good idea. A new account will lower your AAOA (average age of accounts) - and THAT will indeed hinder your score.

[JackBondLove]

I was told that to get a HELOC, I would need 6 accounts that have been getting used regularly. I should probably get that stupid Best Buy card and buy something stupid for $20 and pay the minimum.

Does anyone have a list of BK friendly store cards I should apply for?

[mountanddo]

I was told that to get a HELOC, I would need 6 accounts that have been getting used regularly. I should probably get that stupid Best Buy card and buy something stupid for $20 and pay the minimum.

Does anyone have a list of BK friendly store cards I should apply for?

With the housing market the way it is I am curious why people get HELOC's. Isn't that really just like a big credit card that you take all the cash out at once? I know that it isn't but it sure seems like it. You are basically taking the equity that you have built up in your home and spending it. What would be a good reason to do that and isn't that really living beyond your means as well?

[df04527]

What is equity anymore? .... ugh....

[AngelinaCatHub]

Why do people pay interest to these credit card companies?

It is a choice to pay the interest. If you use the card simply as a convenience rather than cash in your pocket, and pay the whole amount per month before the closure date, you pay no interest. The problem is, people cannot see cash going so it is easy to get sucked into the "free stuff" trap that so many people (we inclusive) start to feel when shopping. We use NO CREDIT CARD, but a debit card (on the credit side for better CC protection). We pay no interest and if we have no money in our account, the card simply does not work. Carry a $100 dollar bill tucked into forgetfulness in your wallet or purse for the rare time that your card is declined (such as a restaurant bill) and that give you mental insurance against embarrassing yourself of you are caught short. Also for any emergency situation.

What is equity anymore? .... ugh....

LOL, those days are over. The house was never meant to be an investment. Long ago a family would purchase and stay long term. Even several generations in the same house. Later days, it went to the point that the "old folks" would retire, inflation then caused the so called equity, and they could move to St. Petersburg FL (the land of walking dead) and purchase a smaller and cheaper place with a nest egg of the profit. Then Government gets in there called capital gains taxes. Today, people have lost all reason to "invest" in a house. Law of supply and demand thanks to Dodd/Frank, and now the flood of empty houses that are valued at fractions of their original costs. BUT, nobody has the money to buy those "bargains". 'Hub

P.S. Where I live, it is becoming a 50/50 proposition of empty houses down every street. Scary. Where are they going?

[Logan]

It is a choice to pay the interest. If you use the card simply as a convenience rather than cash in your pocket, and pay the whole amount per month before the closure date, you pay no interest. The problem is, people cannot see cash going so it is easy to get sucked into the "free stuff" trap that so many people (we inclusive) start to feel when shopping. We use NO CREDIT CARD, but a debit card (on the credit side for better CC protection). We pay no interest and if we have no money in our account, the card simply does not work. Carry a $100 dollar bill tucked into forgetfulness in your wallet or purse for the rare time that your card is declined (such as a restaurant bill) and that give you mental insurance against embarrassing yourself of you are caught short. Also for any emergency situation.

But some of these people put a charge on their cards then pay the minimum thinking it will improve there credit. Just use your card and pay it off and your score will improve without paying interest.

[IBroke]

I was told that to get a HELOC, I would need 6 accounts that have been getting used regularly.

This is an interesting definition. The point is that it is impossible to tell for sure if an account has been used or not simply by using data on the credit-report. You can pay off your card at once and put it in a drawer for a year and it will report $0 for 12 months (if it has no fee). Or you can max it out weekly and always pay it off before closing/reporting-date - and guess what? The reporting will be the same..

[LadyInTheRed]

This is an interesting definition. The point is that it is impossible to tell for sure if an account has been used or not simply by using data on the credit-report. You can pay off your card at once and put it in a drawer for a year and it will report $0 for 12 months (if it has no fee). Or you can max it out weekly and always pay it off before closing/reporting-date - and guess what? The reporting will be the same..

So, if you are using the card to build credit, it's best to wait until after the closing date to pay it off. That way your report will show that you use credit responsibly.

[df04527]

For me, and I preface this with, for me -- I always advise folks to rebuild your credit quicker, faster -- pay EVERY month a little more than the minimum but keep a small balance, below 10% of the max and pay that 10 days before the due date.

Lenders are looking for (and FICO likes) a payment history..... how well are you at making your obligations. Especially after you've bankrupted.

Paying anything off every month really only works for people with very established credit. Credit "rebuilders" need to do exactly that -- rebuild your history of how well you make payments.

But that's me..... Not going to get in to a debate about it though -- this is my opinion, after being in the middle of this business for more than 10 years.