When one anticipates going to ask for a major loan, e.g. purchase of a car or home - best to check out credit rating first. Simplifies things over having the credit granting agency find some negative stuff on your report that has no business being there. Such things leave a bad taste in their mouth, even after the issue gets straightened out - your reputation carries a bit more lasting smirch than it deserves. joyful

Knowledge is power. They don't teach much about money management in school. Many didn't learn much about it at home - as children grow, it seems to me wise to have them gain in-depth knowledge, incrementally, of how the family's financial system works. When I was a kid, we got a weekly allowance, that grew as we grew, and we were epected to buy our clothes for school and cover school expenses (which were smaller than currently). World War II began in 1939 when I was 10, the farmhands went off to war and what Dad and this 10 year old, plus a couple smaller, got done - got done: the rest ... didn't. We had lots of work in summer and Dad paid us for that, which helped us buy the things that we needed to return to school and there was an increase in our allowance, to compensate for the increased chores, year-round. We were encouraged to save some - I had a bank account when I was too young to see over the counter ... and we were expected to pay at Sunday School, church-based youth group, etc. from our allowance. In case of dire emergency, we could borrow against future allowance from Dad, which entailed some questions as to whether we might have foreseen the problem, and, even if not been able to have seen it coming, to cover the cost from savings, had we chosen to have some/(any?). And we learned early the discipline of getting along for a while on less after we'd borrowed, for Dad expected us to repay those loans earlier rather than later. Good training as to management of debt ... which would be helpful much later, when "credit" cards appeared on the scene: we knew that they didn't offer "free money". When we use someone else's money - usually they require some compensation (and, sometimes ... way too much: have you investigated the economics of the recently-arrived "payday loan" game?)! After one has stepped into a bear trap - it's a bit late to wish that one had chosen where to put one's feet more carefully! Looks as though Microsoft has cut some of our opportunity for learning about one portion of personal financial management a bit short, also. ole joyful P.S. When one guy, regardless of how central a position he holds in our economy, can become the richest man in the world in half of a generation ... ... do you figure that possibly sometimes people get overcompensated for some innovative discovery that they have made (usually, along with a number of others)? That just possibly our free-market-based economy could stand some tweaking? And the Bolsheviks and the Commuist systems aren't any better - look at all of the newly-minted millionaires ... nay, billionaires ... that have been appearing in Russia and China as their system matures (goes to seed?). And during their heyday, they arranged things so that not too many became part of the core system - didn't want to spread the largesse around too much - or it'd get too thin for each! o j

DH & I also have several cards with no balance on them. We will be applying for a mortgage soon, so I asked my banker this question. He told me to cancel the majority of the cards, but to keep either a couple with fairly low limits or one card with a pretty decent limit. He said that banks like to see someone have $30,000-$40,000 worth open credit on cards (depending on your income). He says that lets them know that you have a source of available money that you can access quickly. He said they don't like to see huge amounts of open credit because that shows the potential for a problem. We pulled our own credit reports & they said that the amount of unused credit we have may actually be hurting our score. We have only a tiny fraction owed but a lot of open credit. Another thing my banker & the credit report mentioned was the ratio of how much you owe to the amount of open credit. Example: If you owe $5,000 & have two cards with a total credit limit of $20,000, cancelling one card that has a $10,000 limit can actually hurt you. Instead of having a balance that equals one quarter of your available credit, you will now owe an amt. equal to half of your available credit. If you want to cancel, make sure you write a letter to the credit card company & keep it & proof that you mailed it on file. Make sure to request that they note in your file that the card was cancelled at your request. Having a lender cancel your card can hurt your credit score. If you won't be applying for a loan any time soon, you can just leave them & they will drop off of your credit report after a few years.

I have heard in the past that paying off a mortgage does cause your credit score to drop by a certain number of points after the fact- I can't remember the exact number offhand though. However, I can tell you from experience that you don't have to have large debt or a mortgage to have a high credit score. When we went to buy our first home, we hadn't carried more than $2500 in CC debt at any time and had never had a mortgage or car loan; our credit scores were 820 and 810 respectively (DH apparently got a bonus 10 points for having an old cancelled Pier 1 CC in his name- it was the only difference). FWIW, we do what myfask referenced and use a CC for all expenses and pay it in full each month. Since we put everything we can on the card, some months it can be quite high and current activity shows and affects your credit score- it may be one more thing we did right without knowing. Q