Is it bad for my credit rating to have credit cards and not use them?
matt asked:
I have three credit cards but only use one, and pay it off in full every month. I am planning on making a big purchase at Best Buy and can save a lot of money if I open a credit card with the purchase. (I believe like 20% which would be almost $150). I would never use that card again.
I have three credit cards but only use one, and pay it off in full every month. I am planning on making a big purchase at Best Buy and can save a lot of money if I open a credit card with the purchase. (I believe like 20% which would be almost $150). I would never use that card again.
Is it bad for my credit rating to have credit cards that I never use?
Lucy
Tags: Best Buy, Credit Rating, Money
September 29th, 2009 at 7:45 am
You should never have more than three credit cards active at any one time, and they should all have activity on them, however, should not carry any balance. Instead of using your debit card or cash for lunch use your credit cards here and there. Just ensure you pay the bill in full when it comes in each month. If you wish to carry a balance then never carry more than 1/3 of the available credit limit, this can hurt your score, even if you pay it off quickly.
As far as opening another account with Best Buy, I would suggest not too if you do not intend to use it again. Although the 20% is nice, but you have the reality of loosing a couple points from them just checking your credit score, then you can devalue your score more with having another revolving account.
Instead, stop by your local post office and pick up a moving packet, the packet contains the form to fill out for forwarding mail, inside this packet is a coupon for 10% off any purchase at Best Buy.
I would suggest just using one of your other Credit Cards and using the 10% coupon. Then as I mentioned, from time to time use each card for misc things from the store to lunch, dinner etc. Then just pay the bill off or pay more than the min payment due. This will help your credit score.
If you wish in the future to purchase a house, car etc then the lender will be looking for your long term credit history and they want to see three active accounts and in good standing.
I hope this help, and I wish you well, I hope you enjoy your new purchase!
October 2nd, 2009 at 5:33 pm
No, it is not bad for your credit to have cards that you never use.
October 4th, 2009 at 12:44 am
No it is not bad, it is actually good. Your credit rating takes into account your “available” credit and how much credit you’ve actually used. Having more available credit shows lenders that you don’t “need” credit and are responsible therefore it is less of a risk to lend to you.
October 7th, 2009 at 1:58 am
You can use this credit monitoring service to pre-estimate future scores for different scenarios of such payments - buildcredit.ifastnet.com