Hey guys, long time reader, first time poster. I just had an interesting dilemma and thought this would be the place to post it. I'm a 25 y.o. male and in good credit standing (735 last time pulled). I have 3 real CC's with a total of about 18,000 credit limit. I also have a Macy's and JCPenney's card with low limits. I just re-financed my car in April b/c I got a 2.75% rate for 60 months and saved a good deal of money. My primary Credit Card I use is an AMEX and I use it for everything. I pay off the balance in full every month and do not carry a balance. My limit on this card is $5,000. I opened this card July 2010. My other 2 cards are a CapOne (5,000 limit, card opened Nov 2004, I became a user in July 09) and Wells Fargo (8,000 limit, opened July 09). These are both joint with my mother and we did this because I had no credit at the time and could not get any other credit card. I'm actually an authorized user on the CapOne and the Wells we applied together. I use neither of these cards but I have been hesitant to close them b/c of the potential hit on my credit. I don't plan on closing the wells fargo, but I have thought about closing the CapOne because that is my mothers primary credit card and she carries a balance on it. She has never made a late payment but generally carries about a $1,000 balance so it increases my debt/income ratio. My question is, now that I have good and established credit, would I be OK closing that account as an Authorized user and opening a new credit card in my name with a $5,000 limit? I may suffer a slight hit from closing, but decreasing my debt to income ratio could help. My biggest reasoning for all of this is the fact that I want to buy a house next year and I want my Score to be as high as possible. What is the best way to get to the upper 700s or 800? Thanks so much for the help and sorry for the long post!!
Welcome Smitty- glad you took the initiative to finally post. Your question is a good one too. Here's my take. You can't technically "close" the cards that you're an AU on, but you mother can request to have you removed as an AU. I would first think about getting an additional credit card with the intention to add to your total available credit as much as possible. There have been a lot of good promos so far this year, so I would take advantage of one and get yourself another rewards credit card. Once that's in place, I would then consider having your mother remove you as an AU from that card she carries a balance on. Have you ever calculated your actual CU ratio, including the balance she carries? If you're still around 10% or less, then you may just want to leave everything as is. If that balance is consistently driving your CU ratio up, say beyond 30%, then it would make sense to get rid of it since your CU ratio has a larger effect on your credit scores than your overall length of credit history. It sounds like you are a responsible credit card user and never carry a balance yourself, so losing that $5,000 in available credit (and the history) might not have too large of an effect on your overall FICO scores. Hopefully you can get another card to replace the available credit as well, and then I think your scores will continue to rise into the upper 700s. You're still very young, so you've got plenty of time to break into the upper 700s and 800s. Keep us posted on your progress.
Thanks for your response and your help. I was actually about to get the Chase Freedom since they have the $200 cash back after the first $500 spent in 3 months. I'd then go back to using my AMEX Blue Cash. I probably spend about 1000/month on the card and pay it off each month. In regards to my CU ratio, my revolving is as follows.. Credit Limit: 18,124 Balance: 1,687 D/C ratio: 9% Most of that balance is my mothers card. However, my Installment is.. Credit Limit: 43,074 Balance: 37,901 (Student Loans and Car) D/C ratio: 88% This leaves me with an OVERALL CU ratio of 65%. Is the Revolving the most important or does the Installment also matter? Should I open up a few new cards to increase my limit or only one and drop the CapOne with my mother? Because if I dropped hers it would lower the overall 65% ratio, but if the installment isn't as important than I guess it wouldn't matter.
Installment isn't included in the CU ratio calculation. The FICO scoring model only looks at revolving credit, so you're under the 10% mark. I would just get one new card for now and then have your mom remove you as an AU from hers if you're worried about her card. You're going to lose a bit of your credit history, but I don't think it will hurt you too much. In the long run, I think it's best to eventually have your credit separated from parents anyway. The Chase Freedom is a good solid cash back card- you can read our full review here: Chase Freedom Card- $200 Cash Back. As always, it's much appreciated when you apply for a product you want through Creditnet. That's what keeps this forum up, running, and free
I agree with Josh, removing yourself as an authorized user from your moms credit credit would be the best thing. Her balance is too high to benefit you. You might be losing some payment history but I think you would be better off in the long run using your own credit.
