Does Friedmans credit card help your score or not?

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biudowe
 
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Does Friedmans credit card help your score or not?

Postby biudowe » Sat Sep 28, 2013 6:27 pm

my sister is trying to tell me that department store charge cards and the like do not help your score as much as a name brand Visa Mastercard etc. There are two non major cards i have. one is from a clothing store i no longer use and the other is Friedmans jewelers credit card. the credit limit on it is 1800.

how does this play in to my overall credit report and scoring. like how much weight is given to a card from a jewelry store versus from say bank of america, citizens etc.

if it's relevant to the answer i might be using this account again to buy my girlfriend a ring for Christmas. no not an engagement ring but something nice in the $500-700 range. if i had to pay it over time it would only take me 2 or 3 months to pay off max bec i will be getting a big year end bonus or i expect to i should say.


Midori
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Postby Midori » Sat Sep 28, 2013 8:44 pm

If your FICO is calculated by:
35% payment history
30% credit utilization ratio
15% length of credit history
10% new credit
10% types of credit

If you pay your store cards in a timely manner, they should help you with payment history.
If you don't keep balances on them, they should (a) help you with utilization, and (b) add in $x + $y to your available credit.
If you keep them open, they should contribute to your AAoA.
Since they're store cards, it would follow that they contribute to your mix of credit.
I'd be more concerned about carrying high utilization on your Friedman's card, rather than "Oh, no, it's a Friedman's and not a ________." At 8.5% sales tax on a $700 piece of jewelry, that's an extra $60... 42% of $1800. I don't carry balances, so I don't know if "carrying a high balance for a couple of months" will have any long-term effects, or would be negligible unless you were also planning on applying for a car loan/a mortgage/whatever in that time period.
Me, I'd use whatever card gave me the most rewards, unless my Friedman's card would charge me 0% for a period and I had to carry a balance and I knew I could pay it off in less than half the time given. Otherwise, I would scale down my spending to match my budget.

biudowe
 
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Joined: Sat Sep 28, 2013 6:12 pm
Location: NY

Postby biudowe » Sat Sep 28, 2013 9:25 pm

hey thanks for that info you really know you stuff about credit scores it sounds like. my payment history is good on all my accounts. i think in the past 5 years i have only had 2 bills that were paid late.

If you keep them open, they should contribute to your AAoA.


i googled this and that means average age of accounts i think. will that still work if i keep it open but it sits dormant. do only active accounts count for age?

Midori
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Postby Midori » Sun Sep 29, 2013 12:29 pm

I know I'll be corrected if I'm wrong, but it's my understanding that everything you have reports for ten years, both active and closed.

So, say you have a Mastercard that you opened five years ago, a clothing store card from three years ago, and a jewelry store card from three years ago. To keep it simple, let's pretend no student loans, no mortgage, no car loans, no nothing... just those three things. It would be 5+3+3 = 11, divided by 3= 3.6, rounded down, = AAoA = 3 years.

Suppose you close the clothing store card and the jewelry store card, keep the Mastercard, don't open anything new, and fast-forward nine years. Closed cards continue to age for ten years, when they fall off.

Your AAoA would be 14+12+12=38/3=12.6=rounded down=AAoA=12 years.

Fast forward another year so that your cards have aged 10 years, and the two closed cards fall off your score. Now, you just have one card open: a 15-year-old Mastercard, and your AAoA becomes 15.

However, in the process, you've dinged yourself on your credit mix (because you've taken away the store cards) and you've dinged yourself on utilization (because you've taken away the credit lines attached to the clothing store card and the jewelry store card) and you've perhaps dinged yourself on payment history, because you have only one item that you're paying on, versus three items showing how great you are paying your bills on time. And remember that AAoA is only 15%, versus 75% on those other three issues in play.

So, open-but-inactive-because-you-don't-use-'em-much accounts contribute to your credit score, because they're open. Accounts that are inactive because they've been actually closed continue to contribute for ten years after closure, but then they disappear. So suddenly, you've got two (hypothetical) twelve-year cards disappearing that wouldn't have dropped off if you'd used them a little bit, plus the other factors.

takeshi
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Postby takeshi » Mon Sep 30, 2013 10:43 am

Midori wrote:If your FICO is calculated by:
35% payment history
30% credit utilization ratio
15% length of credit history
10% new credit
10% types of credit

Note that "types of credit" does not mean "store versus non-store". It means, revolving credit, charge cards, auto loans, mortgages, etc. Store versus non-store or even the branding of the card is not a consideration. A given card doesn't help or hurt your score in and of itself. Your usage affects your score for the most part. A card's credit limit does play a part in your utilization though but it looks like Midori covered that.

biudowe wrote:my sister is trying to tell me that department store charge cards and the like do not help your score as much as a name brand Visa Mastercard etc.

...and always consider the source, verify your source's source and corroborate.



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