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Discussion Starter · #1 ·
Slowly but surely, we're getting rid of our consumer debt. One paid off/canceled, 3 to go. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/thumb.gif" style="border:0px solid;" title="thumbs up"> I'm so excited! Our tax refund will pay off the biggest one remaining, and if/when the GWB stimulus payment thingy gets here, that'll pay off the other 2. Woohoo!
 

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Woohooo! Congratulations! <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/clap.gif" style="border:0px solid;" title="clap">
 

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<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/thumb.gif" style="border:0px solid;" title="thumbs up"> It is a good feeling <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile">
 

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Doesn't it feel great?!<br><br>
I just wanted to make one suggestion to look into before you cancel anymore. We did the whole refinance and paid off our debt scenario 2 years ago. Not knowing it would effect our credit negatively, we canceled all the credit cards after paying them off. It KILLED our credit. Your credit report doesn't reflect why a card was canceled, only that it was canceled. Having credit cards open just not being used (cut them up instead) actually helps your credit. It makes no sense to me. I guess the reason is it shows your debt/credit to income ratio positively vs. showing you have no credit.<br>
Anyway, just look into it. our credit score plummeting after closing our credit cards.
 

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That's great, I can't wait to cut up some cards!
 

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<div>Originally Posted by <strong>spsmom</strong> <a href="/community/forum/post/10763962"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Doesn't it feel great?!<br><br>
I just wanted to make one suggestion to look into before you cancel anymore. We did the whole refinance and paid off our debt scenario 2 years ago. Not knowing it would effect our credit negatively, we canceled all the credit cards after paying them off. It KILLED our credit. Your credit report doesn't reflect why a card was canceled, only that it was canceled. Having credit cards open just not being used (cut them up instead) actually helps your credit. It makes no sense to me. I guess the reason is it shows your debt/credit to income ratio positively vs. showing you have no credit.<br>
Anyway, just look into it. our credit score plummeting after closing our credit cards.</div>
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Your credit score only matters when mortgage shopping if you are looking for a mortgage with a company that bases their entire decision upon your credit score. A lender that is doing his job, instead of relying upon the FICO, will look at the overall picture, see that you have a good down payment, a steady job, no debt, and aren't trying to take on too much debt in your mortgage. Look for lenders that do manual underwriting. It's how mortgages used to be done before the banks invented "Lending for Dummies".
 

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I also agree that it's great to be debt free, but that I wouldn't actually close all the accounts. You really do need your FICO score for more than just a mortgage. Insurance companies look at it too, and it affects your rates. No matter how much we may hate debt, our society is credit driven. Credit scores DO matter, even if we have no intention of ever using credit again.<br><br>
If you want to close some accounts, make sure to leave the one with the longest history and highest credit limit open, and just cut it up or freeze it.<br><br>
I say this because right now we are trying to raise our fico scores in order to get better insurance premiums, and to buy a house in 1-3 years. The mortgage broker told us we should try to get some more revolving credit to help our score. We always pay cash for everything, and the only debts we have are our installment student loans. I guess FICO likes a balance of different kinds of credit.<br><br>
Congratulations on paying off your debt though. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile">
 

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We plan to keep one of the cards open - maybe 2 - and never EVER use them. We won't be mortgage shopping again (we just built a house on family land that we'll be in for the rest of our lives) but I know that the credit score does affect insurance rates and other crap. I hate having to work within the system, but knowing the rules does make it easier.
 

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Be aware that if your plan is to keep credit cards open for your score, you most likely WILL have to use them. Otherwise they will close your inactive accounts. I've read posts from a lot of people on The Motley Fool who are having this happen with their Bank of America and Cap One cards.
 

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<div>Originally Posted by <strong>llamalluv</strong> <a href="/community/forum/post/10766720"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Be aware that if your plan is to keep credit cards open for your score, you most likely WILL have to use them. Otherwise they will close your inactive accounts. I've read posts from a lot of people on The Motley Fool who are having this happen with their Bank of America and Cap One cards.</div>
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That's true too, but there are always things that you could use it for that would be better than using a debit card.<br><br>
For example, reserving a hotel room (so you don't have a hold on your actual bank account), or if you are buying or ordering something that you may want the buyer protection on. I'd rather give a credit card # to order something, that way if for some reason the # was stolen, I would be protected. That's better than suddenly having all your bills start bouncing from your bank account.<br><br>
It's generally not too hard to remember to use it for something small you'd spend cash on anyway once or twice a year.<br><br>
I think it's more of a mindset about how you see your available credit. Some people think 'oh boy, I've got this 5K credit card, that means I have 5K to spend', while some people do not see that 5K credit line as money in their pocket. They see it as a tool to use responsibly. (We used to be the former, and are now the latter <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile"> )
 

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Congrats on getting rid of some of your debt- what a great feeling!
 

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Speaking from personal experience, for most cards, it take *years* for them to close them due to inactivity. I wouldn't worry too much about that.<br><br>
A credit score is not just for mortgages. A lot of employers look it up when you interview for a job. Almost all landlords will look it up before you rent a property. It's worth keeping good credit if you can.
 

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Cool beans!
 

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<div>Originally Posted by <strong>zersha</strong> <a href="/community/forum/post/10767011"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">That's true too, but there are always things that you could use it for that would be better than using a debit card.<br><br>
For example, reserving a hotel room (so you don't have a hold on your actual bank account), or if you are buying or ordering something that you may want the buyer protection on. I'd rather give a credit card # to order something, that way if for some reason the # was stolen, I would be protected. That's better than suddenly having all your bills start bouncing from your bank account.<br></div>
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My husband and I have traveled several times over the last year and a half, and we have never had these problems that "everyone" is always citing as the reason to carry a credit card. We have stayed with four different hotel chains, and none of them have placed a hold on our card until we arrived, and then it was for the total estimated bill (room rate times the number of nights).<br><br>
We have rented cars and the "huge" deposit that "everyone" fears? Between $50 and $200, well under our baby emergency fund balance of $1000.<br><br>
We have the same fraud protection on our Mastercard debit card that is given to Mastercard credit card holders. We get the same buyer protection.<br><br>
Because we pay cash for nearly everything that we buy (groceries, gas, clothes, etc), and we use bill pay for our electric, cable, etc, and rarely use our debit card, bounced checks are not really a problem. By paying cash, our goods are paid for, and the seller has their money at the time of the transaction. With online bill pay, we can see how much we have in our account, and the money is debited from our account balance immediately and these transactions take precedence over any checks that might come in that same day. The only checks that could <b>possibly</b> bounce would be the one we write to the church each week.
 

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<div>Originally Posted by <strong>SusannahM</strong> <a href="/community/forum/post/10768258"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">A credit score is not just for mortgages. A lot of employers look it up when you interview for a job. Almost all landlords will look it up before you rent a property. It's worth keeping good credit if you can.</div>
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I had no credit when I rented my first apartment, and got my first job, and a lack of a credit score did not hurt me in any way. Landlords and employers are looking to see if you have BAD credit. They are looking to see if you have been a bad risk and financially irresponsible in the past. They are looking at your credit REPORT, not your SCORE.<br><br>
BAD credit (collections, late payments, etc) will hurt you. NO credit may or may not.<br><br>
The only way one can maintain "good" credit (a high score) is to stay in debt.<br><br>
I'd prefer to just shop around for a little bit to find an insurance company that won't penalize me for being responsible. Not all of them do.
 

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<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
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<div>Originally Posted by <strong>llamalluv</strong> <a href="/community/forum/post/10796388"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
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The only way one can maintain "good" credit (a high score) is to stay in debt.<br></div>
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I don't believe that at all. All you need to have a 'good' credit score is to have AVAILABLE credit. Not a bunch of maxed out charge cards.<br><br>
I guess this board leans more to DR than to Suze Orman, but she recommends having some available credit, and having a good FICO score.<br><br>
To each his/her own, I guess.
 
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