We've now got two main issues here: the merit of the article, and the appropriateness of the new thread.

1. I agree that this piece is better than the typical piece. It's particularly helpful that the piece notes how much disagreement (and, I would add, outright ignorance) among experts there is on many of these questions: In fact, four credit experts were interviewed for this story and they offered contradicting advice. At the same time, the author rightly implies, there are some elements of credit score protection that are beyond controversy:However, they all agreed on two major things:

* Make your payments on time. One late fee or even two can really bring down your credit score and increase the rates on your other credit cards. You are the only person responsible for payment.

* Do not run up your credit. Ideally, you should keep your balance low -- less than 30% of your credit limit on each card.This was responsible reporting on the part of the writer, and it is certainly consistant with my experience RE "experts" and their conflicting information.


The major weakness is the piece is that ASININE attribution to Steve Rhode: that each time you open a store credit card, 20 points are taken off of your credit score This is WRONG, period. Now, since it's not a quotation, it's unclear whether the fault lies mostly with the reporter, or Mr. Rhode, but it's a serious enough error that one or both of them really should issue a correction. Many thousands of readers will recall that very specific tidbit, and it will cause many needlessly heated arguments between spouses about that latest dept store card used to get the $10 off discount on, e.g., the new living room set. The truth is that while store cards do not offer all the same benefits as bankcards to a credit profile, esp a new one, they will not hurt a credit profile significantly--unless, of course, they're used poorly (high utilization, late payments, etc.)


2. As for the OP's creating a new thread. For me, the key is that the OP wasn't asking the question, but rather providing a link to a new and useful piece (with one glaring flaw). Had he simply been asking a question asked before, he could be plausibly chided for not referencing the FAQs, placing it there, et cetera.

As it stands, this is new info, clearly worthy of its own thread, and a helpful post, IMO. OP gets green from me. (I might title the thread a bit differently, so it's clear that OP ISN'T asking, but providing new info--but that's a very minor point.)


Now, as for DYS's post. Note that he did NOT neg the thread, nor in any way suggest that the OP shouldn't have posted it. He only disagreed with the specific statement that "it had not been discussed in its own topic." This is a reasonable claim on DYS's part, and perfectly consistent with a view that the larger thread is entirely appropriate.


OP raises some other questions about our practices here concerning FAQs vs. new threads. As of 9am, OP's reply that raises these questions already has several positive votes. I agree that these are good questions, worthy of discussion. I do think we'd probably be better off doing so in a thread devoted to that, rather than taking OP's thread OT.

FWIW...

(Edited for typos only)

Ok, I think the vets can agree (as with those in the article), that having less than 50% util per card is a huge factor. I personally feel below the 50% threshold (per card again) is the "best balance point". Dropping from 50% to below something like 25% might not make as big an impact. I'm making up numbers here but would think that the FICO score has this type of point "curve" with utilization on a per card basis:

0% : 0 point change
1%-24% : -1 points
25-49% : -2 points
51-74% : -7 points
75-89% : -10 points
90%+ : -12 points

Again, I'm making these numbers up but would guess they aren't far off. On 0% util on a card, I put a 0 point change because I'm not factoring in the total # of cards open... because, we all know that having more cards with low util on each will help your "overall" utilization across all cards and increasing your score.

So, in my personal CC management, I keep cards below 50% for "FICO score" purposes. Of course, I do the occasional high util 0% BT when it makes sense to me (not needing to apply for some credit in the near term).

I found the article helpful, so thank you OP.

One thing I don't really understand is the 50% ratio - is it per card, or overall? As an example:

I have one card with $1000 CL and a $1000 balance - utilization is 100% (assume no interest), and another card with $10k CL and $0 balance. Overall, the utilization is $1000/$11k ~ 9%. Would the score be affected negatively by this?

If store credit cards were opened for a long time, would it be good to close them?

mikkopel said:I keep hearing this all the time, that to start building your credit you should
open up a store account. But when I was starting, I tried to open a Sears account,
and would not get one, due to the lack of previous credit.

Maybe it's Sears, and I should've tried someone else, but isn't a secured credit card
better in that you'll be more likely to get approved?

Sears Card are handled by Citibank, so I assume it's not a Storecard?

didYOUsearch said:ttllkktt said:If store credit cards were opened for a long time, would it be good to close them?no. read the CC Faq. You dont close accounts.

A lot of experts say the opposite as well, and say not to keep unused lines open.

The big guys are right. The important part to understand is:

It’s true that having too many open accounts can hurt your score. But once you’ve opened the accounts, you’ve done the damage. You can’t repair it by shutting the account, and you may actually make things worse.

I can only assume that ignorant people assume that by closing accounts it rectifies the "too many open accounts," while it reality it doesn't quite work that way. That you might have "Too many open accounts" is a proactive warning to not open them in the first place, not reactive advice to close down those you already have.

The trick remains, how many is too many? The answer to which depends on many variables specific to each individual. It's like asking how many licks does it take to get to the center of a tootsie roll tootsie pop? The world may never know.

BigBucksNoWhammy said:I can only assume that ignorant people assume that by closing accounts it rectifies the "too many open accounts," while it reality it doesn't quite work that way.

Yes.

Keep in mind that virtually all financial advisors and financial journalists buy into what they see as a benign paternalism here. Indeed, many readily admit this when asked. The reasoning goes like this:

1. Many (if not most) cannot handle large/multiple credit lines without doing themselves financial harm.
2. Thus, we should convince people that they should not obtain many/large credit lines.
3. As a result, we will always play up reasons to keep credit modest--both obtained and used.


The first point is demonstrably true. The issue is whether the second and third point follow. Reasonable people can disagree on that. I for one don't think misleading people for their own benefit is effective in the long run, and I have other philosophical problems with it as well.

LaJollaInvestor said:There is also a benefit to having 1-2 dept store cards, especially ones with high limits and long histories.



Though it's fact that long histories and high credit limits on cc's are beneficial, I have yet to be convinced that having store cards in your portfolio helps the scores.