Does having multiple credit cards help your credit? | TigerDroppings.com

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WG_Dawg
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Atlanta
Member since Jun 2004
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Does having multiple credit cards help your credit?


This will be kinda long, bear with me. My first credit card was a Secured Card with capital one, where my credit limit was however much money I wrote them a check for ($250). After a while I guess my credit built up and was able to get a "real" credit card, a rewards card through my bank with a good limit. For a while I would still use the old secured card maybe once a month or so, just to keep it active. Now, I don't ever use it and can't even remember the last time I have. I use my rewards card exclusively.

So my question is, is there any negative to canceling that first, secured card? If I do cancel they will send me my $250 deposit back, which is cool because it's almost like free money. As it relates to building up my credit score, how does keeping and using/canceling that card affect things? Or does it?







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wegotdatwood
Arkansas Fan
Member since Aug 2009
17094 posts

re: Does having multiple credit cards help your credit?


Over time, yes. It makes your amount of credit higher.

In the short term it will ding your score a little.






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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
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re: Does having multiple credit cards help your credit?


So what should I do? Like I said I don't ever use that old capitalone card. Should I

a)keep it and start using is sparingly, once a month or so

b)keep it just to have so it's not canceled

c)cancel it and get the $250 back






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LSU13
LSU Fan
Dallas, TX
Member since Oct 2005
379 posts

re: Does having multiple credit cards help your credit?


If your Cap One card was open for more than a year longer than your other card then keep it open, and use it sparingly.
Your length of time with credit helps your score.
If not, close it and get your money back.






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ed3303
LSU Fan
Alexandria
Member since Jan 2009
178 posts

re: Does having multiple credit cards help your credit?


Typically, you would not want to close any accounts, and use them just enough keep them active and keep them paid off. However, in your case it may be a wash since your Capital One card will show up as a secured credit card which are typically held by higher risk individuals. I would think that you would be better off closing that account and possibly opening another better quality account and keeping the balance at or near zero. Just keep in mind that a sizable percentage of your credit score is attributed to length or age of accounts. In almost every case, you would want to keep a card/line or credit open even if you never use it.





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WG_Dawg
Georgia Fan
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Member since Jun 2004
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re: Does having multiple credit cards help your credit?


So am I supposed to keep that secured card forever? It was the first card I ever had and has an extremely small limit. And unlike my rewards card that I use every day I don't get any benefits from it.





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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29944 posts

re: Does having multiple credit cards help your credit?


quote:

If I do cancel they will send me my $250 deposit back, which is cool because it's almost like free money.


Put it to you this way - you have given them a $250 interest-free loan. You should want it back, right?

Yes, cancelling an old credit line will ding you slightly but not all that much. I'd get the $250.






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wegotdatwood
Arkansas Fan
Member since Aug 2009
17094 posts

re: Does having multiple credit cards help your credit?


quote:

Yes, cancelling an old credit line will ding you slightly but not all that much. I'd get the $250.







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LSUGUMBO
New Orleans Saints Fan
Shreveport, LA
Member since Sep 2005
4857 posts

re: Does having multiple credit cards help your credit?


I had a couple of pretty old lines of credit that I kept open because they were some of my oldest lines of credit. This past week, I got a fraud alert on a newer card that I don't use that often (somebody duplicated my card and went to a Dillard's in AZ and spent a couple hundred on it). After that, I decided to cancel all of my credit line s except the ones I use most frequently. I know it dinged my credit score a little, but my score was 800+ before, and I'm not planning any large purchases for at least the next year, so I'm not that worries about it.





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Ace Midnight
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Ball, LA - Home, Sweet Home
Member since Dec 2006
29989 posts
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re: Does having multiple credit cards help your credit?


quote:

So my question is, is there any negative to canceling that first, secured card? If I do cancel they will send me my $250 deposit back, which is cool because it's almost like free money. As it relates to building up my credit score, how does keeping and using/canceling that card affect things? Or does it?


I wouldn't hold that secured card anymore, unless it doesn't report itself as secured.

There will be a hit to the average age of credit lines and you'll lose that history, but that's not worth keeping a secured card - in my opinion.

What is far more important, if you're concerned about your score, is consistent payment history and total credit utilization. Rule 1 - keep your credit utilization to less than 50% - and that's much easier to do with a single card. Rule 2 - pay the credit card first - mortgage, student loans, lines of credit, you have to miss a couple of payments before they even raise a red flag (at least for most of them), but the CC companies are generally a lot quicker on the late payment ding to your credit report.

Hope this helps.



This post was edited on 3/24 at 9:53 am


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JonTheTigerFan
LSU Fan
Central, LA
Member since Nov 2003
4696 posts

re: Does having multiple credit cards help your credit?


quote:

What is far more important, if you're concerned about your score, is consistent payment history and total credit utilization. Rule 1 - keep your credit utilization to less than 50% - and that's much easier to do with a single card. Rule 2 - pay the credit card first - mortgage, student loans, lines of credit, you have to miss a couple of payments before they even raise a red flag (at least for most of them), but the CC companies are generally a lot quicker on the late payment ding to your credit report.


If you're 30 days or more late on ANY account, they can and will report it to the bureaus. It will affect your score in a BIG way to miss payments, especially when they're recently missed.

Also, if you get to a time when you need to apply for new credit, get your utilization down below 10% on revolving credit. It will dramatically help your score.

Like others have said, canceling your card will ding you a little but will still report for 10 years after you close it. (Negatives show for 7 years only)






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the LSUSaint
LSU Fan
Member since Nov 2009
5209 posts

re: Does having multiple credit cards help your credit?


Call the "secured card" helpdeak and ask to increase your limit. If they do that would look better as far as your utilization of the credit line. That is IF you keep it. Basically, why not have a $1000 limit with 0 balance instead of the $250 limit with 0 balance.





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Ace Midnight
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Ball, LA - Home, Sweet Home
Member since Dec 2006
29989 posts
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re: Does having multiple credit cards help your credit?


quote:

If you're 30 days or more late on ANY account, they can and will report it to the bureaus. It will affect your score in a BIG way to miss payments, especially when they're recently missed.


And I didn't mean to imply there were no consequences, but in my experience, it takes a while for a late mortage payment to show up - and if you make it good before the trigger is hit, it won't show up at all. But some credit card issuers (Sears was notorious for this) would slam you at 35 or 40 days past due in some instances - sure, it only showed as 30 days past - and fair is fair, but that seemed a little bit of a hair trigger.

I was just suggesting that you make sure you pay the CC on time, for points purposes, and mortgages and SL servicers seem much more lenient about how long before they report you (but everyone's experience on this probably varies).







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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29944 posts

re: Does having multiple credit cards help your credit?


The often-overlooked point here is that if you are reported as being late even one time by 30 days or more, your credit score will take an immediate and large nosedive and stay there for a few years.

But length of credit history and credit utilization are small potatoes by comparison, and nobody maintains a history of whether at some time in the past you maxed your credit card. It only comes into play if you happen to get your scored pulled at that time. If you max your credit card last month the score will drop a bit (some but not hugely). Then if you pay it off in full the next month, your score will bounce right back up again like nothing had ever happened.

Honestly I wouldn't worry about it all that much. It certainly isn't worth letting someone have an interest-free $250 loan, just get the money back and close the account. This isn't a close call.






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BACONisMEATcandy
LSU Fan
Delta, Amex, & Über Threads
Member since Dec 2007
41601 posts

re: Does having multiple credit cards help your credit?


Close that card





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WG_Dawg
Georgia Fan
Atlanta
Member since Jun 2004
40345 posts
 Online 

re: Does having multiple credit cards help your credit?


thanks for all the advice guys, I'll close it tomorrow





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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
29944 posts

re: Does having multiple credit cards help your credit?


Good choice. Buy some beer with the money and raise a glass to the MB.





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JonTheTigerFan
LSU Fan
Central, LA
Member since Nov 2003
4696 posts

re: Does having multiple credit cards help your credit?


quote:

The often-overlooked point here is that if you are reported as being late even one time by 30 days or more, your credit score will take an immediate and large nosedive and stay there for a few years.

But length of credit history and credit utilization are small potatoes by comparison, and nobody maintains a history of whether at some time in the past you maxed your credit card. It only comes into play if you happen to get your scored pulled at that time. If you max your credit card last month the score will drop a bit (some but not hugely). Then if you pay it off in full the next month, your score will bounce right back up again like nothing had ever happened.


I agree with all of this except for utilization being small potatoes. I subscribed to MyFico ScoreWatch while I was shopping for then building my house. I played around with my utilization to see how it affected my score. When I went from 0 utilization one month to roughly 35% the next month, my FICO score dropped 21 points. That is a significant amount when trying to get approved for new credit. Like you said, though, it bounces right back up like it never happened when you pay the cards off the next month.






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