Credit Card Questions

"credit score" is insignificant. If you are trying to live debt free and live on less than you make, ultimately. So I say YES--transfer balances to those "new interest free cards and get them paid off--THEN cut up ALL cards!

p.s. Some will consider this a "commercial" for Dave Ramsay--and it is! :)

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If you can't pay for it with cash then you don't need it. Read The Total Money Makeover by Dave Ramsey. You don't need a credit score. My goal is to have a credit score of zero.

L.

P.S. As the mortgage broker employee said you need credit bacause you don't know when life will happen; that is true but that is why you build up an emergency cash supply. You don't ever need to go into debt if you just plan for the future.

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I have actually done the "interest free merry-go-round" as we call it, with our credit cards. We now don't have any debt on CC but are still paying off my student loans and a truck (we are Dave Ramsey people). I do know that after we paid off the last payment and closed that credit card our credit score SKYROCKETED. I mean to the point that when people that do a credit check on us say things like, "I didn't know credit scores actually went that high" and "that is the highest score I have EVER seen" with bugged out eyes. Of course, we had never missed a payment on anything ever so we were doing pretty well to begin with.

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Basically you are 'Robbing Peter to Pay Paul'......this will catch up to you & damage your score, sometimes it takes a little time. The 3 scoring companies will review your information especially when you have a new inquiry, so when you have multiple inquiries & they are just credit cards this is a red flag because they will see this as a hardship. I think you should work on paying off your cc bill & leave the tempting 0% applications in the garbage.

I will add that I am a huge Dave Ramsey fan & do highly recommend taking the class but I was also a Mortgage Broker for 20 years & have seen all walks of life & most people really really need to take the class. And I will add that the class is NOT just for people who have cc debt, it teaches you about how to pay off your mortgage, how to buy a car or any other major purchases, how to invest in stocks, mutual funds, life insurance, and so much more.

And Dave also believes that having absolutely NO credit history is best HOWEVER not until you have completely become financially free & have tons & tons of money saved & have complete financial freedom.

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I do know one of the factors that contributes to your credit score is the length of time you have had a credit card (longer is better). Also anytime you get a new credit card, there will be a "hard inquiry" listed on your credit - basically every time you apply for credit, it will damage your credit score a little bit.

How much it affects your score, I don't know exactly. I think the most important factors are the amount of credit you have vs your balance, and whether or not you pay on time.

Try creditkarma.com - it's free and they explain a lot of this stuff - how different factors affect your credit score.

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I can't say that it is or isn't an issue with affecting your credit score. But I know that if you are doing that b/c you have a problem paying it down, then you have a bigger issue with spending beyond your means and need to address that rather than rotating through all the credit card issuers.

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You've already gotten some good answers. With all due respect to Dave Ramsey, please ignore - for now - the ones that say you don't need credit. Unless you're in a position to pay cash for a house or a car - and it doesn't sound like you are - then you WILL need credit.

The length of time that you've had an active account with a creditor is an important part of your credit score. I have accounts still open that I opened in college and I haven't used them in years, but they show 14 years of good credit history. So if you do move to a new account, don't close the old one. If you are carrying a balance on a card and the introductory rate is about to expire, call up an old account that you had (and kept open) and see what they'll offer you for a transfer balance. You may be able to get a low rate for a few months. As someone else answered, spread your balances around if you are getting too close to your credit limit on one card.

At the end of the day, you really do need a plan for ending the credit card game. The best way to use a credit card is to only charge what you can pay off each month and earn rewards. My mother is very disciplined and charges $800-$1000 a month in gas, groceries, and other shopping but she also budgets the same amount every month and pays the bill in full. In the meantime, she's earning points on all of her expenses. Most of us aren't disciplined enough to do that though, so switch to lower interest when possible but be aggressive about paying down that balance and keep your old accounts open. Then settle on one card with reasonable interest and good rewards to use judiciously or in an emergency.

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Every time you close a credit card account it lowers your credit score.

I have to agree with Kristen. Keep your balances low! Having high balances will also lower your credit score. Hits on your credit report will also lower it.

Applying for new cards can potentially lower it. You may not notice it today but if you start this crazy cycle, your credit score will reflect it.

I work for a mortgage company and we do A LOT of credit counseling.

Little known fact - never charge more than 50% of your limit. Its better to have 3 cards with $1000 limits and only $500 balances than it is to have 1 card with a $1000 limit and has a balance of $900.

Best way to build your scores is to use your credit - charge gas or groceries and pay it off when the statement comes.

I agree with some of Dave Ramsey's recommendations but not all of them. You do need to have an ability to get credit because you just never know when life will happen.

the longer you are with a cc company, the better your score is.
so if you keep switching over and over, that will eventually catch up with you.

also, this shows up on your record even if it doesnt immediately effect your score, so when you DO go to a new company they will see that and likely charge you higher interest.