Living with Less Credit
The new credit card law was signed into law in May 2009. This blog has previously written about the new terms that will dramatically affect you.
Now the credit card companies have until February 2010 to implement the new Government changes, but, each company can begin to change their programs starting immediately.
You must read every monthly statement and the T & C (terms and conditions). Many people are finding their credit lines are being cut, interest rates increased and payment cycles reduced. It is what it is, so, check your statements each month.
Other people are doing “plasectomies” with chainsaws on their cards. Keep in mind if you eliminate your cards, it will eventually negatively affect your credit scores with no activity. Also, the old adage holds true … it is better to have credit and not need it, than, need the credit and not be able to get it.
If you want to get back at the card company … charge things and pay them off in full immediately. They hate that!!!
Rick said,
Wrote on October 28, 2009 @ 9:25 am
I’ve also read that having too many credit cards (i.e. multiple mastercards, visas, amex, etc) can negatively affect your credit score, even if no balances charged against them. Just having the availability is considered negative. If that’s correct, what’s the proper balance of credit cards/credit?
Paul said,
Wrote on October 28, 2009 @ 9:44 am
Rick, that is the problem with the FICO score system. Too many cards puts a ding against your score. On the other hand too high a balance causes more of a ding. The old rule is that the max on any card should not be more than 40% of the crdit limit. So, with a $10000 limit…never let the balance go above $4000.
Funny…it is better to have 10 cards with a $1000 balance each than one card with a $10000 balance.
There is no formula for number of cards to income. In general …5 cards should be a maximum. This does not include gas or store cards.:)
Paul