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Credit Repair - should i get another credit card
Expert: Regan Shinski - 10/22/2009
Question
I only have one credit card, Mastercard. I've used it for many years and have good credit. But I am 58 years old, never owned a house and paid off my car many years ago, after making payments for a few years and have been unemployed for a very long time. I also had a different mastercard years ago that it no longer active. Although my credit report shows me in good standing (I don't know my exact score), I just wonder that if I ever need to make a major purchase, like another car, is my credit history and just one current credit card, enough to show I have good credit or do I need or should I get another one to bolster it? Thanks
Answer
Lee:
It is nearly impossible for me to predict with 100% certainty what you need to do to be able to purchase a vehicle or improve your score. There are just so many factors that go into a score and the exact formula is a tightly guarded secret.
To further complicate this, each lender has different standards of acceptance, so the score is no longer the only factor in lending decisions. None credit related factors such as income, job stability, down payment, and assets also factor into larger purchase approval.
However, you definitely have a thin file. People with pristine credit usually have more accounts and revolving credit. I believe you are also hampered by not having a mortgage or installment loan on file. The problem with opening new credit while having a thin file is that often the immediate impact is to lower the score. Once the account has been open and reporting positively for 3-12 months, the score will rebound - usually above where it was before the accounts were opened. This is the doubled-edged sword you may face, but there is no way around it.
If you are not planning a major purchase in the near future, I would give strong consideration to opening another account or two. I would not open more than a card or two every 6-12 months. If you are declined, don't keep applying as inquiries can also hurt your credit. Instead, move down to a subprime or secured card until your portfolio is more full and credit becomes much easier.
If you need to get a vehicle in the near future, I would not open a new credit card until after you apply for the car. The risk of a credit score drop is real for the short term. Again, long term, your credit will be better with more accounts. It's just a matter of timing and a decision you have to make based on your situation.
You can also purchase your credit score through various websites including www.myfico.com and www.experian.com as examples. This will give you an idea of where you stand. You can then contact lenders directly and get an idea if you would qualify for credit with them. Do NOT let them pull you credit until you are ready to apply.
I hope this helps. Please contact me if you have any other questions.
Regan
mbscompany@aim.com
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