On Sun, 16 Jan 2011 21:09:05 -0800, SMS
wrote:

On 1/16/2011 7:34 PM, Vic Smith wrote:

That link says you lose the history of good credit on that card.
If you're never use it it's worthless for credit history.
But it does add onto your "available" credit, and that's not good.

No, it's good, because it lowers your debt to credit ratio. It's
counter-intuitive, but that the way it works.

Lots of apples and oranges.
My reading of the debt/credit ratio component of FICO scoring is the
debt part is based on revolving credit balance.
So if you don't carry a balance the ratio is always sterling.
And even if you occasionally carry a balance, since FICO is
periodically recalculated, having useless credit cards around is
senseless, especially if they are sending you zero balance bills and
adding to the junk mail.

Much of this FICO stuff is lender and CC scamming.
They want you to keep the card so they get transaction fees.
FICO is a decent tool for creditors, but way too much of it made for
those who pay their bills on time and use their CC's as a convenience,
and not as a loan machine
Of course the FICO algorithms are "trade secrets."


You're right about the debt/credit ratio having a FICO score effect
for those with revolving credit balances.
But you can't say how much. That factoring is a "secret."
Good way to scare those folks to get more credit cards, get into more
debt, and ultimately increase the already usurious interest rates on
their cards.

When I got my mortgage in 1997 my mortgage broker told me to cancel
unused cards. I had a hefty balance on one card.
And a couple other unused cards with high limits.
According to him the lenders didn't like all the "available credit."
So FICO was only one criteria they used.
Of course lenders had a sense of fiduciary responsibility then.
Similarly, insurance companies use a modified "insurance FICO" to
assign risk and determine premiums - some of them don't use FICO at
all. It's all "trade secrets" of course.

No question that you don't want a poor FICO score.
And you want to avoid felony convictions too.
But for the average Joe who pays his bills on time and doesn't carry a
CC balance, you don't have to worry about it.
Certainly not enough to listen to bankers threatening your FICO score
if you don't keep their credit card.

--Vic