credit cards....and getting duped

[holymuchos]

Hey all,
Didn''t know where this topic should go, but I guess it has more to do with SHOPPING than DIAMONDS, so I''ll put it here. Mods, please feel free to relocate if necessary.

Over the last year, I went to countless diamond/ring stores to find that perfect shiny band for my fiancee. I wasn''t really "poor" at the time, but any extra money could be helpful. At some of the stores, they asked if I wanted to see if I could qualify for their special diamond loan. Sounded like a good idea at the time, and I (seemingly naive and curious at the time) of course obliged. They proceeded to run to the back to "check" and soon I was handed a number that represented the dollar amount I qualified for. I casually thanked them, wrote down the number, and went on my merry way.

It wasn''t until a few weeks later that I started getting a few credit cards in the mail. Not credit card offers with fake flimsy John Doe cards, but real cards that had my name on them. Real cards from THOSE diamond stores. I frantically called all the stores that I got cards from, and they seemed to all give me the same story, "oh, we thought you wanted to go ahead with our low interest credit card (or loan) when we inquired for you about the amount you could get". To me, inquiring != opening a credit card or loan. I guess I was wrong.

In over my head and scared now (again, my naive self at its finest), I quickly called all the card companies/banks to cancel them. I had always heard that having more cards than you can use can be a hindrance to your credit score (which is probably a double edged sword). And with me still being in my early 20s, I was just starting to relish the idea of buying a house in a few years (so a good credit rating is starting to enter my mind). Thinking everything was fine, now that my cards were cancelled, I went on living my life peacefully (though I did go the the gym on occasion to beat the living **** out of the punching bag, just to ease my frustration about what happened).

Then, when I recently moved to a new apartment, I was given a copy of my credit report after my rental application was complete. I''ve never seen one before, so I glanced through it and saw these "cards" and "loans" that technically I only had for a day or so. To tell you the truth, I didn''t even "activate" those cards, and pondered how they could appear on my credit report. Not good, I thought.

So now I ask the vastly more wise community of pricescope, did I just screw myself by inquiring for these so called "loans", even though I closed/cancelled them before even having a balance? And if so, how can I protect myself in the future? (truthfully, I don''t know if these hurt my score, as I never saw my score prior, so I have no basis)

Thanks for any help/guidance,
Philip


p.s. This story does have a happy ending, as I finally ditched the fancy stores (who seemed to just have a lack of knowledge about what they were trying to sell to me) and came to pricescope to learn the real truth about diamonds. I then found out about GoodOldGold and had wonderfully informative conversations with John at GOG. The rest, as they say, is history.

 

[Tacori E-ring]

Hey Philip, don''t you hate having to worry about things such as FICO scores?!? Not much you can do about it now. Information changes so fast. I remember when I bought my first home it was better to close unused cards. Then a few years later it was better to leave them open. I doubt it really did any damage. I think length of credit history and debt to card limit ratio are probably the most important (but I am not an expert so that is just the feeling I get). I know things drop after 7 years but not sure if the number of open accounts/closed accounts do. Good luck to you.

 

[fleur-de-lis]

Short answer: not much. Though inquiries have a small impact on your great rating and FICO scores, things like balance relative to available credit (utilization), timeliness/lates, and age play a far larger role, especially since you have already closed them "at consumer request" and hold no balances on them. If you want to grab back those relatively few points you lost, there are a number of credit-help user boards out there-- I think creditboards.com or .net is one of them?-- where you could ask this question and find out the tricks to getting items removed from your reports if you so desire.

f-d-l

P.S. Great news on the GOG! Congrats!

 

[Hudson_Hawk]

Did you sign anything when you "inquired"? If so, you authorized them to open the account. Basically credit works off of a debt to income ratio. How much debt/available credit do you have compared to your income. Keeping the cards open can be a good thing because it shows that people were willing to give you credit-which you have not used. So you have available credit but little debt compared to your income. That''s where people go wrong with closing their cards though.

Say you have 3 credit cards. 1 has $500 used out of $1000 another has $900 used out of $1000 and one has $50 used out of $1000. You have $1950 in debt out of an available $3000.

Say you pay off the $50 and close that card. Now you have $1900 in debt out of an available $2000.

Which scenario looks better to you?

You could try to write to the credit bureaus and dispute each of them. Explain what happened. If you have documentation of your communication with the store (disputing the cards), include copies.

If you don''t have much credit history then this may not hurt you too bad (because you might not be carrying a lot of debt).

To build credit you should open a low interest credit card with a low spending limit (so you''re not tempted). Each month, charge a small amount and pay it off 100% This shows that you''re using your credit, but paying it off in full each month.

For people who are trying to build up available credit quickly, I''ve heard (though I''m not sure I agree with it) that you should pay it off 90%-95% so you always carry a small balance. This shows that you''re responsible, but the CC companies still make $ off of you through the interest and they want to give you more credit as a result. I''m not sure this is a good idea, but theoretically it makes sense.

 

[holymuchos]

Thanks so much for the quick replies. If its only a few points, then I probably shouldn''t let it bother me (or maybe I''ll just hit the bag a few more times)

I only have 1 credit card that I use often (gas, groceries, etc). I never carry a balance, always paying it off every month. I rarely ever spend more than 20% of my available credit limit each month, so I guess that''s good.

Again, thanks for alleviating some doubt I had. I love pricescope!

Philip

 

[asscherisme]

Actually I would personally get a second major credit card as a back up. Use it once in a while to keep it active. What if your other card gets lost or stolen? Or in the current credit environment your credit limit gets reduced? Having another card could actually help keep your percent utilization lower. I got my credit report recently and it said that the ideal fico achievers had 7% utilization. I would recommend researching carefully before you pick another card and go witha mastercard or visa so its widely accepted. Maybe even one with rewards like gas rewards or cashback on groceries.

As for the store cards, were you giving them your social security number? I thought people needed a SS# to run a credit check? Safeguard your SS and NEVER give it out unless you are applying yourself and KNOW that you are or for a mortgage or other loan, or medical or job.

If its been a few years, I doubt have have done much damage. I would just move on and look at it as a lesson learned.

My husband use to be one of those who opened a store card everywhere he shopped for the stupid discount and then closed them after paying the first bill. When we got married and I saw his credit report in preperation for buying our first home, it was very cluttered with all those closed accounts. BUT he also had a 798 credit score (that is a super great score).