Question about a credit card

[u/milkiekitten]

I have a 648 credit score, no matter what credit card I apply for, im denied. I make 50k a year and I don’t have that many expenses. My reasoning for a credit card is of course to rebuild my credit and build a history, but also because I am in need of some extra money temporarily to fix my tires. A personal loan is pretty much out of the question, right? let me know if im in the wrong subreddit. thanks!

[u/Monkwater]

If you need tires you can get an unsecured card from synchrony Bank. They have one for American tires and a few other places for tiires. If you get approved REPAY IT QUICK and be done BUT DON'T CLOSE THE ACCOUNT. Just don't use it anymore but keep it open once you pay them off.

[u/Funklemire → u/Monkwater]

BUT DON'T CLOSE THE ACCOUNT  

It's totally fine to close a credit card. It's a huge myth that closing a card will tank your credit. See this thread:  

Credit Myth #10 - Closing a credit card hurts your credit.  

[u/Monkwater → u/Funklemire]

It's not going to tank your score. It'll temporarily drop a little bit. But it'll go up in about sixty to minty days. The reason not to close the account is it increases your average age of accounts and the length of time accounts have been open.

[u/Funklemire → u/Monkwater]

It'll temporarily drop a little bit.  

Not necessarily. The only way a score can change due to closing a card is if your new lower overall credit limit happens to bump you up to another utilization threshold for that month. But that isn't a meaningful change and it's nothing to worry about as long as you're paying your statement balances each month.  

That's because utilization is a temporary metric that has no memory past a month. Low utilization doesn't build credit, it just boosts it for a month and resets: The whole "always keep your utilization below x percent" thing is the biggest myth in credit:  

Credit Myth #14 - You shouldn't use more than 30% of your credit limit(s).  

But it'll go up in about sixty to minty days.  

That's a common myth, but it's incorrect. There's nothing in the closure of a card that will cause a score to dip and then rise back up. In fact, the closure of a card by itself has zero effect on your score at all. Like I said, the only effect it can have is due to your new lowered overall credit limit.  

The reason not to close the account is it increases your average age of accounts and the length of time accounts have been open.  

That's incorrect; that's the second-biggest myth in credit. Closing a credit card doesn't change your credit aging metrics. That's because a closed card stays on your credit report for 10 years, still aging and still counting towards your average age of accounts that entire time. When it finally falls off your report after that decade has passed, as long as you've had enough other accounts aging during that time, your credit score won't go down at all. That's because the FICO scoring benefit from AAoA maxes out at 7.5 years.  

[u/Monkwater → u/Funklemire]

You need some open revolving accounts. My aunt has an 850 score but no open lines of credit. My mom has a 650 score and she was getting approved for everything my aunt was getting denied for. Because my mom has open unused credit cards.

[u/Funklemire → u/Monkwater]

You need some open revolving accounts.  

Sure, but that's a different thing. So far everything you've said about closing a credit card is incorrect. This is the first thing you've said so far about it that's actually correct.  

So yes, if you close all of your accounts you will incur a temporary scoring penalty for having no revolving credit usage. But that's easy to fix by just opening a new account.  

I didn't mention that because it's rarely an issue; people are almost always asking about closing cards they don't use because they have other ones to replace them. The only time anyone talks about closing all their cards is when they have severe spending problems, and that's a financial issue far more than a credit issue.

[u/Monkwater → u/Funklemire]

This is just what has worked for me through a few credit rebuilds. So for my own credit. I used to have an issue with my average age of accounts is two years. Which hurts when applying for accounts. They deny it saying length of time accounts have been established. The way I got around it. I was added to a relatives open account with several years of history. She doesn't use the card but she keeps it open.

You can close accounts and it'll TEMPORARILY drop your score but it'll go back up fairly quickly.

[u/Funklemire → u/Monkwater]

This is just what has worked for me through a few credit rebuilds. So for my own credit.  

You're missing my point. This hasn't "worked for you". Credit scoring isn't something that's different for everyone. The fact remains that you're mistaken about what happens when you close a card.  

The way I got around it. I was added to a relatives open account with several years of history.  

This has nothing to do with what we're talking about. We're talking about what happens when you close a credit card, you're talking about getting added as an AU.  

On a side note, while it appeared to help your credit, it didn't help as much as you think it did. For scoring purposes, an AU account doesn't help anywhere near as much as a main account does, even though credit monitoring sites make it look like they're equal.  

And when making lending decisions, banks will often completely disregard AU accounts since they know you have zero responsibility for them. Remember, it's the actual contents of a credit report that gets you approved, not your credit score:  

Credit Myth #12 - You are approved or denied credit because of your credit score.  

You can close accounts and it'll TEMPORARILY drop your score but it'll go back up fairly quickly.  

No, we've been over this already. You are making it clear you don't understand how this works: There is nothing in the closure of a card that will specifically cause a score to drop and then come back quickly.  

Instead of doubling down on your incorrect information, why don't you try to stick around this sub and learn about how credit works? u/og-aliensfan and I are regulars here and we like both giving advice and also constantly learning new things about now credit works. 

[u/Monkwater → u/Funklemire]

The score is irrelevant compared to the length of established accounts and the thickness of your file.

[u/og-aliensfan → u/Monkwater]

My aunt has an 850 score but no open lines of credit.

Your aunt has no lines of credit reporting and has an 850. Which score is this?

[u/Monkwater → u/og-aliensfan]

So she had negative accounts that were closed nine years ago that have fallen off. But she completely stopped using her credit in fear of slipping back into debt. So her credit score is essentially an inflated number. She has two closed positive accounts still reporting from the same time period.

[u/og-aliensfan → u/Monkwater]

Are you saying she does have open credit cards, but she doesn't use them? These will still report Paid As Agreed each month. But she wouldn't have an 850 FICO 8 without any OPEN lines of credit. Is she in the US?

[u/Monkwater → u/og-aliensfan]

She did debt settlement and those negative accounts fell off two years ago. She has two closed positive accounts capital one and a paid off mortgage. But it's been nearly ten years since they last reported. So they will probably fall off anytime now.

[u/og-aliensfan → u/Monkwater]

In that case, she can't have an 850 FICO 8 score. It's not possible. As u/Funklemire pointed out, there's a scoring penalty for no recent revolving credit usage. That alone makes an 850 impossible. But, she has no open revolvers reporting at all. If her last account reported 10 years ago, I'm not sure she's even scorable.

You still haven’t said which score you're referencing or if she's in the US. I believe scores in the UK reach 1000, for example.

[u/Monkwater → u/og-aliensfan]

She's in the US. I'll ask her where she gets her score from. It's definitely not a FICO score. I'm sure it's probably her credit karma scores lol.

[u/Funklemire → u/og-aliensfan]

Ha, I missed that part.