Does breaking into a New Credit Card help your Credit Score?

[bs9999]

I got two new credit cards with relatively high credit limits but i just dont need their available credit but i do want them to help my credit score... so i was figuring to just put them in a safe place never to be touched .....

Does it make it difference for my credit score to "break into" these credit cards for the first time by putting at least $1 debt (or anything) and then pay off the entire existing balance right away and then never use those cards ever again versues just activating the card and putting it away to never be touched ever?

Thanks

[DanielCarrera]

I am not an expert, but based on what I've learned from other people in this forum I would say that part of what goes into the credit score formula includes:

1. The date when you last used the credit card

Credit that you haven't used for a long time won't count towards your credit. You could just use the card 2 or 3 months before you apply for credit. Just buy a $1 candy with it. Just enough so that under "date last used" you have a more recent date.

2. If you applied for credit recently.

A pattern of applying for credit often is indicative of bad credit. For example, some people will try to get a new credit card to borrow money to pay for another (!!!!). So, every time you apply for a new credit card or line of credit your credit takes a small hit, but it comes back up after a while without applying for new credit.

That said, you shouldn't worry about shopping for the best mortgage rate. The system is smart enough to not penalize you for *that*.

3. Your debt level divided by your credit limit.

If you owe $500 on a $1000 credit limit, that is worse than if you owe the same $500 on a $2000 credit limit or if you owe $250 on a $1000 credit limit. So, in the longer term, yes, having a new credit card will improve your credit, assuming that you don't borrow more.


In brief, having the card around and not using it is a good plan. I'd only suggest that you use it a little bit a few months before applying for a mortgage. I say a few months because I don't know how long it takes for the credit score to be updated, and I doubt that it is very quick.

[asdfvcx]

I got two new credit cards with relatively high credit limits but i just dont need their available credit but i do want them to help my credit score... so i was figuring to just put them in a safe place never to be touched .....
If you are capable of getting 2 credit cards with high limits, then why are you concerned about your credit score? There doesn't appear to be anything wrong with your ability to get credit.

[bs9999]

If you are capable of getting 2 credit cards with high limits, then why are you concerned about your credit score? There doesn't appear to be anything wrong with your ability to get credit.

My ego! It's always wanting a higher score...higher, HIGHER! :cheesygri :cheesygri

Thanks to you and especially, danielcarrera above for all the help....it has cleared things up

[DanielCarrera]

If you are capable of getting 2 credit cards with high limits, then why are you concerned about your credit score? There doesn't appear to be anything wrong with your ability to get credit.

Because people who are conscientious about their credit are the ones most likely to have good credit.

[asdfvcx]

Because people who are conscientious about their credit are the ones most likely to have good credit.
Yes, but you don't need to game the system to get an acceptable credit score. Pay your bills on time and sometime in your late teens or early twenties get a credit card and use it responsibly. That's about it.

It seems to me people are placing a lot more important on their credit score than it deserves. As long as your credit record isn't horrible, getting a mortgage is easy. It's a secure loan the banks are happy to give you, as long as you don't have a massive amount of black marks on your record. And if your score isn't low, it's likely it will have no effect on the interest rate as well. Banks are more concerned about your income and your debt service ratio.

Same thing for a car loan. If your income and amount of other debt is reasonable compared to the size of the loan, then as long as your credit record is reasonable, you're fine.


Unless you are planning to do a large amount of unsercured borrowing or already have a bad credit history, this is not a number which has much effect on your life.

[DanielCarrera]

Yes, but you don't need to game the system to get an acceptable credit score...
It seems to me people are placing a lot more important on their credit score than it deserves. As long as your credit record isn't horrible, getting a mortgage is easy.

But qualifying for 0% financing on a car loan is less easy. It's not about whether you can find some form of mortgage, or some form of can loan. A better credit score can end up saving you real money. Anyways, I don't particularly try to game the system but I do encourage people to be conscious about their credit score.