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Sunflower State | 95h - 9/21/2010 10:14
Not disagreeing with your post EricCKS, makes good sense. Part I don't understand is that closing Credit Cards with no outstanding balance on them, can actually go against a person's credit rating. Was watching the morning news, and some financial guru's were stating be very very careful about closing unused credit cards cause the Credit scorer's see that as Loss of credit potential. Shows as a negative on credit ratings.
No problem at all. What I found banking is having several cards or lines of credit with zero balance is an accident waiting to happen. Read, new home owner and suddenly "needing" new furniture to go with the new mortgage. Debt to equity ratio can change over night. Making revolving accounts revolve is better than setting around. Double edged sword is you incur debt to revolve the account. Not all bad if you are disciplined with the credit.
My own experience. We have one CC we use for my business expenses only and are reimbursed monthly. No other card. All the others we opened to get free t-shirts and discounts on expensive underwear have been closed on purpose. Good thing, Victoria Secret takes cash. Now there are only three active account. Mortgage, Sallie Mae (feel free to help pay her off for us), and Discover. Credit score a couple years ago, 800+. Not bragging, just giving a real life example. I think there are too many variables built into the formulas to make blanket statements. And as mentioned below, the formulas are top secret woooooo.
Key thing to remember is a credit score is simply a reflection of how much debt you have incurred and how you paid it back. Nothing more. You could have a million dollars in cash, never borrowed and have a score of 400 or even 0. Now who is smarter financially, the guy with 800 in debt up to the eyeballs meeting the obligation. Or the millionaire with a 0 score. To each his own. I agree, the system is flawed.
Edit: I wonder how many of the talking heads on TV are broke using their own logic.
Edited by EricCKS 9/21/2010 13:19
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do credit clean -up services work ?
