Credit Tips: Credit Cards Needed to Establish Credit

Posted On: February 1, 2006

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Posted: Thu Jan 13, 2005 4:23 pm
Post subject: Credit Cards Needed to Establish Credit

Katrina
Date: 4/26/2000 2:24 pm CDT

My husband and I plan to buy our first home in the next couple of years so we are anxious to maintain the good credit rating we already have, and make it even better if possible. I understand that we need to show that we can maintain good lines of credit to help with this rating, but right now we only have an auto loan and three credit cards to prove this. The auto loan will be paid off within the year and we only actively use one of the credit cards.

We would love to cancel the two cards that we do not use but are worried that this will eliminate some examples of good credit on our report. But since we are not using them, will they even count as good credit when we go to buy a house?

I know the easy thing to do would be to start actively using at least one of the cards again, but the card that we do use now is our GM card (we do pay the balance in full every month) and we would really like all of our credit card spending to go towards the rewards on this card.

So, what’s the best plan for using our cards to maximize our good credit?

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Posted: Thu Jan 13, 2005 4:23 pm
Post subject: Credit Cards Needed to Establish Credit

Board Monitor
Date: 4/27/2000 12:45 am CDT

Katrina,

Thanks for your recent post to our message board. While I am certainly not a mortgage loan officer, I will attempt to answer your question! In most cases, I don’t think that it would hurt to keep all three credit card accounts open and, in fact, in some cases doing so would help substantiate the fact that you are credit worthy.

However, some financial advisors do advise that you should close an account if you are not using it. So, this is not a “black and white” issue. My advice…check with a mortgage loan officer in your area (not that I am trying to “pass the buck” or anything!).

Good luck and I hope this helps!

Regards,
Jackie Hughes
Board Monitor
CardRatings.org