Question: Can credit card jumping hurt your credit rating? Either to take advantage >of >>a special offer or get a better rate? >>Kim
>I’ve heard yes . . . >The deal is that when you transfer your old 10% card balance to a new one at >1%, the credit agency keeps track of the total credit you now have between >the two credit companies. Keep this up, and you can end up with 30 or 40 >accounts, and should you go apply for a house mortgage, the mortgage company >looks at how much credit you already have. If they figure you can handle >$100,000 of credit and you want a $80,000 house, and you have 30 credit >cards each with $2000 limits, they figure you’ve already used up $60,000 of >your available credit. > So . . . what you want to do is transfer your high interest account to >the low interest one, and contact the old company and make sure they close >your old account. And then you can live happily ever after.
Answer: No need to close the old accounts. If a loan company requests it for a home loan, you can do it at that time for a short time. Just keep no balance and many lenders will disregard the cards. I had about a dozen accounts when I last applied for a mortgage. (A while back, admittedly.)
Flipping accounts can actually build your credit rating, as long as you pay on time. A trick to remember with credit is that past performance counts. If you’ve never taken out a loan, you are a big risk. If you’ve taken out many loans and paid them back or are in the process of paying them back, you are a low risk.
The larger the loan you pay back, the better your credit. Spend $200 on a CC and ask for an increase in spending limit and you’ll get a small increase. Spend close to your limit and pay it back, then ask for an increase, and you’ll get a larger increase.
Being able to request an auto loan with the knowledge that you could pay for the car with your CC might keep you from accepting an unreasonable rate. Timing a major purchase to coincide with a “low introductory rate or balance transfer” might be a smarter move than taking out a conventional loan. I would never have just one or two CCs. If one pisses me off with an attitude or charge, it goes in the freezer. In a year or two, I might take it back out. If it still upsets me, I’ll keep a tiny positive balance to cost the company postage and processing, while improving my credit.
Related posts:
- Suspended Credit Card: Effect on credit?
- Chase Credit Card after Home Closing
- Does credit card balance affect credit ratings?
- Please help – I need to get my credit card debt under control
- HELP: Buying a card with a credit card?
- Help with debt and credit card consolidation
- Credit card balance transfer?
- Credit card “new balance”
- How do we maximize our home purchasing credit limit?
- credit card debt
- Credit card vs loan question
- Need Credit Card Advice