Need advice about credit score

[clairegie 265]

I'll try my best to explain the situation.

*Tried applying for my first credit card with Capital One and got as far as the deposit part. I tried depositing money and the website is giving me error messages. Tried getting in touch with their customer service and was told the transaction didn't push through. So I just forget about this and tried my luck with Navy Fed and got approved.

*Checked my credit score and I was surprised that it went down. I use up 80% of my credit limit. Never late on payments, always paid in full, etc. because I wanted to build my credit. I honestly had no clue why. Then noticed I had another card and it was Capital One.

*Apparently the deposit to Capital One DID push through but the transaction only showed up a month or so after on my debit account so I didn't notice it. I also didn't get the credit card until weeks after because it was mistakenly routed to a relative with the same last name who recently moved out. I never received any confirmation about this account getting set up and its been open for a little bit over 3 months now. Credit card has not been activated.

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My questions:

1. Is it the Capital One card (and the account being open and unused) causing my credit score to go down? (Went down 27 points, that seems like a a lot to me. Is it?)

2. Should I cancel the Capital One card or just keep it and use it too?

3. CapOne card only has $200 credit limit on it. Even if the limit is low, does it make a huge impact on the credit score if it gets cancelled and/if I use it?

4. Does your credit limit impact your credit score or is it mostly based on how responsible you are about handling payments?

I really appreciate any feedback I can get on this. Thank you all so much!

[Avery Cates 1,141]

I'll try my best to explain the situation.

*Tried applying for my first credit card with Capital One and got as far as the deposit part. I tried depositing money and the website is giving me error messages. Tried getting in touch with their customer service and was told the transaction didn't push through. So I just forget about this and tried my luck with Navy Fed and got approved.

*Checked my credit score and I was surprised that it went down. I use up 80% of my credit limit. Never late on payments, always paid in full, etc. because I wanted to build my credit. I honestly had no clue why. Then noticed I had another card and it was Capital One.

*Apparently the deposit to Capital One DID push through but the transaction only showed up a month or so after on my debit account so I didn't notice it. I also didn't get the credit card until weeks after because it was mistakenly routed to a relative with the same last name who recently moved out. I never received any confirmation about this account getting set up and its been open for a little bit over 3 months now. Credit card has not been activated.

---

My questions:

1. Is it the Capital One card (and the account being open and unused) causing my credit score to go down? (Went down 27 points, that seems like a a lot to me. Is it?)

2. Should I cancel the Capital One card or just keep it and use it too?

3. CapOne card only has $200 credit limit on it. Even if the limit is low, does it make a huge impact on the credit score if it gets cancelled and/if I use it?

4. Does your credit limit impact your credit score or is it mostly based on how responsible you are about handling payments?

I really appreciate any feedback I can get on this. Thank you all so much!

When you apply for a credit card, they do what's considered a "hard" credit inquiry. You need to be very careful with these, as the more you have the lower your credit score can be. Having a number of these inquiries in a short period of time makes it look like you're desperate for credit and lenders can take that into strong consideration.

Using 80% of your credit limit is another bad sign. Right now it looks like you really need credit, and you have to use most of those lines of credit to stay afloat. What you want to do is use around 20-25% of your limit, and make your payments timely each month. The limit itself doesn't matter entirely, only utilization and timely payments.

The Capital One card is of limited use, really. The only real benefit to it is if you use it for a while you may start getting card offers from Capital One partners who look at credit reports from TransUnion. One important thing to note about these Capital One secured cards is that they DO NOT report under FICO. This matters because most loans (house, mortgage, etc) only look at your FICO credit score, so your Capital One secured card does not help for that. Later on if you apply for and are accepted for one of their partner offers through a major and reputable card, that one may start reporting to FICO. You should check if your Navy Fed card reports to FICO, you may want to inquire with them about that so you know.

[arken 4,197]

I'll try my best to explain the situation.

*Tried applying for my first credit card with Capital One and got as far as the deposit part. I tried depositing money and the website is giving me error messages. Tried getting in touch with their customer service and was told the transaction didn't push through. So I just forget about this and tried my luck with Navy Fed and got approved.

*Checked my credit score and I was surprised that it went down. I use up 80% of my credit limit. Never late on payments, always paid in full, etc. because I wanted to build my credit. I honestly had no clue why. Then noticed I had another card and it was Capital One.

*Apparently the deposit to Capital One DID push through but the transaction only showed up a month or so after on my debit account so I didn't notice it. I also didn't get the credit card until weeks after because it was mistakenly routed to a relative with the same last name who recently moved out. I never received any confirmation about this account getting set up and its been open for a little bit over 3 months now. Credit card has not been activated.

---

My questions:

1. Is it the Capital One card (and the account being open and unused) causing my credit score to go down? (Went down 27 points, that seems like a a lot to me. Is it?) While opening another card within 12 months period will affect the score to go down slightly initially, it is the 80% utilization that is causing your score to go down. Limit your usage to no more than 30% (as minimum as possible) and pay on time and you'll see your score jumping up.

2. Should I cancel the Capital One card or just keep it and use it too? DO NOT CANCEL. It will have negative impact. Activate it and you can keep it or use it once a while for very low purchases like 10-30 dollars. Sometime some banks will close the account if the card is not used for a prolonged time.

3. CapOne card only has $200 credit limit on it. Even if the limit is low, does it make a huge impact on the credit score if it gets cancelled and/if I use it? Hard inquiry has already been made for this card. So it has already impacted your credit score. Activating will not cause any impact. It is good for your credit history if you activate it and keep it and use time time to time for low cost purchases.

4. Does your credit limit impact your credit score or is it mostly based on how responsible you are about handling payments? While credit limit also plays some role in credit score, the main is the utilization % and on time payments. As said earlier, you do not wanna use your card for more than 30% of the limit for better score (10-20% is even better than 30%) and then keep paying on time. It is always better to keep the balance as low as possible so that utilization % is always as minimum as possible.

I really appreciate any feedback I can get on this. Thank you all so much!

[clairegie 265]

Thank you very much!

[Avery Cates 1,141]

2. Should I cancel the Capital One card or just keep it and use it too? DO NOT CANCEL. It will have negative impact.

Not necessarily. Credit length is a determining factor for certain types of credit, such as a car loan or mortgage, so in some instances cancelling a card can have a negative effect if it's one of your older cards, since that can reduce the length of your credit history. In this case since it's all brand new credit, this wouldn't matter in that aspect much.

However, cancelling it would also be somewhat foolish, since you've just gone through the trouble of getting a hard credit inquiry for yourself for it, there's not really any sense in cancelling and having nothing to show for your trouble. Since your credit utilization on one card is so high, I would suggest lowering that utilization of that one to around 25%, and utilize the Capital One card to 25%, and then make both payments timely. While the Capital One secured doesn't report to Experian/FICO, it will report to TransUnion, and there's no harm at all in getting that reporting underway by using what you already have.