Rejected from Paypal CC! (1 Viewer)

[jeff lam]

I started out with my credit union with a $500 limit, be responsible, pay off your bills and soon you will get cc offeres every day. I get several a day sometimes, even from ones I already have a card from. Be responsible with your credit, build it up and soon you wil have huge limits. In five years I've built up enough credit, now I have 5 cards with a total limit high enough to buy a new car with but don't carry a balance with any except the one which is currently 0% APR till December. And even that is only a few hundred dollars and can be paid off in 1 month if I pinch my spending a little. Good Credit is very easy to get, just make all your payments on time and don't run up your balances. Most of all, just be responsible with your credit and you'll be fine.

 

[MickeS]

Yes. You are carrying a theoretical debt that's 4 times your income. They don't check if you are actually using the credit cards, they see that you potentially have that debt.

Of course, if you're not planning on applying for credit somewhere else, it doesn't matter if you have those credit cards or not. But if you're not planning using them, it's better to close them.

/Mike

 

[David Susilo]

Thank you for the info. Now I have closed approximately 25% of my available credits. Moving on to my next question.

Is there any difference between a regular credit card and line-of-credit card? Should I close that account too? I don't see myself using it in a foreseeable future. I never (and hopefully, ever) spend any money I don't have coz I really hate to owe money.

 

[Kevin P]

Is there any difference between a regular credit card and line-of-credit card?

I've never heard of a "line-of-credit" card before. Is that like a home equity line with a card attached to it or something? I would think it would work the same way, whatever the limit is, which is the maximum you can run up on the line/credit card, is what the creditors look at on your credit report.

If you don't use a credit card or line of credit, I would close it, except maybe one for emergencies.

Actually, I think "debt-to-income" ratio is more of a "debt PAYMENT to income ratio". At least when it comes to installment debt like mortgages and car loans, it's not the total debt that matters so much as how much you have to pay per month/year on it. This ratio should be no more than 33% in most cases. For a credit card they usually go by the minimum required monthly payment. So, if your card has a 10K limit and a 5% minimum payment, and you max that card out, you'd have to pay at least $500/month, ($6000/year), which would count toward your debt-income ratio.

With credit lines such as credit cards, it may be a total potential debt to income ratio that's used. But for installment debt the ratio they use is based on how much you're required to pay per month or year to your income.

KJP

 

[KyleS]

Is there any difference between a regular credit card and line-of-credit card?

As far as ending up on your credit report or adding up against your income vs debt? NOPE. It works just like a credit card because its not "your" money so if you have 10K in a credit line available to you then they count it as if you have the 10K already out. Sorry to tell you but unless you have the money in a saving, money market, or other account then it will count against you.

KyleS

 

[David Susilo]

Thanks for the replies, I'll close my line-of-credit card as well then. Why on earth the bank gave me line-of-credit at the exact same amount of my income is beyond me. I never even used it ever.

 

[Mark Philp]

A word of advise. If you want to cancel several credit cards, do not do so all at once. Do one, wait about six months and do another etc. If you cancel them all at once, it will appear that you are having financial trouble and not only will it effect your future credit, but might cause your other cards to raise your interest rate. I had a friend who cancelled five or six cards at one time and kept only one card. With in a couple of months, that card raised his interest rate from 11% to 24% because the now considered him a "poor risk". Go figure.