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I have three credit cards that I am poised to pay in full. They total around $5000. I make around $30000.
How many cards is too many? Is the age of accounts average worth paying a maintanance fee for on a card you don't use? What do open accounts that never get used do to you? I am in the process of eliminating my revolving debt and I want to know what strategy will improve my score the best overall.
If the debt of $5000 has not been reported in your credit report, you should immediately pay it off in full. Now, what I think is that, you should maintain a maximum of 2 to 3 credit cards so that you can keep track of your spending. You can have as many cards as your want provided you have a good credit score, but if you use these cards and miss any payments, your credit score may get affected.
Yes, you should pay off the outstanding annual charges if you have still not done so because these will be considered as debts and may get reported as delinquent in your credit report and lower your credit score. You need to pay annual charges even if you have not used the card. Moreover, if you want to close any card, you should always close the newer ones as they do not have a credit history. You can even close such cards which you have not used so far.
My cards have had balances in good standing for a while. I mainly want to make sure that paying them off at once is the best for raising my score. I luckily don't have any annual fees for any of them. If accounts don't have balances, in what ways do they affect your credit report?
Black sunshine, You listed on another post that your debt to income ratio was not very good. Paying off the revolving debt will be better for that purpose and will raise your score. You necessarily do not have to close any accounts just leave them at a 0 balance and maybe do a purchase here and there. Are the cards you are paying a fee on your oldest lines of credit? The older the line of credit is the better for your score as long as it is curent.
Hi Sunshine
The two most important factors that affect your credit score is your "credit history" and the "amounts owed". Now if you max out your credit cards, the debt increases. So the "amounts owed" factor that contributes 30% in your score gets affected, resulting in lowering of your score. Therefore you should always try and spend up to a maximum of 30% of the credit limit on the cards.
If you pay the minimum amount within the due date and avoid the late payment mark on your cards, your credit score would definitely improve. You need not pay the entire outstanding amount at one time to improve your score, provided you can afford to pay the interest on the amounts owed. However, if you want to avoid interest, you can pay it off in full within the due date. Only delinquent accounts lower your credit score. An account becomes delinquent if you have not made any payment towards the debt for a continuous period of six months.
What if you haven't made a payment in over six years?