I’m thinking of opening a whole bunch of credit cards (like 1 a month) to enhance my debt-to-available-credit ratio. Any thoughts on this? (Good? Bad? Why?)
Each time you apply for a card, you credit report will be pulled. Multiple inquiries can lower your score for a bit.
Why don’t you ask for an increase in credit line from the cards you already have?
Not a good idea. The number of inquiries into your credit report has a negative impact on your score. Its not a quantity game, its a quality game. Have a few credit cards with high credit limits but low balances. Get a variety of credit; Amex, Visa, Car Loan, Mortgage etc. Oh, and pay your bills on time, there is no magic formula.
Lori is correct. Instead of getting new cards; ask your current credit card companies to increase your limit. This will help because one of the factors they consider is the balance to limit ratio on your current credit cards.
That is about the worst idea I’ve heard of…I think your are confusing Debt to Income Ratio…cuz debt to available credit means you have the potential of getting into a HUGE debt, meaning why would I want to lend you money if the chances are you are gonna get yourself in a whole you can’t get out!!!
Gypsy,
I was not confusing anything. I was merely pointing out one of the factors taken into account when scoring credit. “Potential” to get into debt is not taken into the scoring equation. Credit scoring takes into account several factors, one of them being debt to available credit ratio. It is more favorable to keep your balances low on your credit cards in relation to your maximum credit available. Therefore rather than paying the balances down on his cards if he increases the available credit he will accomplish the exact same result. We all have the “potential” to utilize our credit in ways both good and bad to achieve “huge debt” as you put it, but credit companies have no magic crystal ball to see the future. Which is why people can keep getting new credit cards even when they are maxed out on others.
Since you found my idea to be so bad perhaps you could enlighten us with your intimate knowledge of the credit system??
sorry for the confusion Christopher W, that was directed to Speedy Word…I do agree with LOri and Your post. But geez no reason to get your panties in a not! I would also look into Pay rent build credit if you need it http://prbc.com/default.php? I would also never advise cancelling old credit cards, that will never help just hurt you.
Gypsy,
No sweat. I meant no disrespect. I just like to poke fun once in awhile. Did not mean to offend you. I apologize if I did.
Everyone is correct when saying that multiple inquiries will bring your credit score down but the number of inquires for it to make a difference even among credit repair professionals is uncertain. I’ve heard that 10 in a two week period will start to affect it and 14 in a two week period will begin to affect it. But one a month will definitely not do anything to it. I improved my credit score by obtaining multiple secured credit cards (3), keeping the balances at no more that 30% of max available credit and paying off the balances in full every month. This tells the bureaus that you do not need all of your available credit to survive therefore you are not cash hungry, which means you are less of a credit risk. Sometimes it’s easier to just get a secured credit card than have them give you more available credit. It really depends on the company. I had perfect pay history for a year with one and they didn’t increase my limit, but then with another(a major bank) my credit limit was increased $1700 in just 5 months and that account was started with a $300 secured deposit . Also, usually whenever you open up a new secured, the following month your scores will spike, I was told aprox. 7 points, each revolving line of credit, then they will ease back down the following months but still be higher than where they were originally. Anyhow, that’s what I was told when I began my credit repair, and I was happy to see that was the trend I experienced.