credit score question

[shocksyde]

Originally posted by: halik
How does utilization work when it comes to unlimited Amex cards? I've got an amex gold card that has to hard credit limit... whats the utilization on that?

Cards such as that Amex and alot of CapOne cards are tricky. Since your reported credit limit on your credit report is your high balance, it looks like you max the card out, which is bad. CapOne is apparently going to change this practice.

One way to get around it is to make a large purchase on the card, then pay it off and use it normally. That way your reported credit limit is higher. Don't go buy something expensive unless you need to, though.

 

[MrWizzard]

Originally posted by: shocksyde

Originally posted by: MrWizzard

This may be true, but everything I have stated here I was told by loan officers in California in the last month. Seeing as I am trying to buy some property. Go ahead and go to Creditboards.com, they may have some valuable insight.

Being a loan officer doesn't make you a credit expert. All he knows is your score needs to be above XXX and you need to make $XX,XXX a year to qualify for his product.

Myfico.com also has great information. Why? Because they're the company that tallies your score. And just recently they've started educating people on the factors that go into a credit score. Please read up before you give people bad advice, such as your loan officer did.

I'm trying to attack you personally, if anything I'm attacking your loan officer. It's not your fault he's an idiot.
EDIT: Oh, and I can see it coming already, so let me say this: I am not a credit expert, either. I know. But I have done my research.

Live and learn. Thanks. If I can get my 30 year for 5% I'll be happy.

 

[kami333]

Originally posted by: halik
How does utilization work when it comes to unlimited Amex cards? I've got an amex gold card that has to hard credit limit... whats the utilization on that?

They should report the high limit, the maximum you have ever charged on your account. Which can be bad since if you charge a similar amount each month your credit report can show that you have very high utilization. From what I've experienced and read, 90%, 50% and 35% are important "levels" of utilization.

 

[Viper GTS]

Visa Signature cards are another common one that don't report limits. Typically the historical high balance will get used as the "limit" for utilization calculations.

If you really want to keep util down convert to something that does report limits.

Viper GTS

 

[shocksyde]

Originally posted by: MrWizzard

Live and learn. Thanks. If I can get my 30 year for 5% I'll be happy.

Are you talking about a home loan? at 5%? That's incredibly low.

 

[MrWizzard]

Originally posted by: shocksyde

Originally posted by: MrWizzard

Live and learn. Thanks. If I can get my 30 year for 5% I'll be happy.

Are you talking about a home loan? at 5%? That's incredibly low.

Yep

 

[kami333]

Originally posted by: MrWizzard

Originally posted by: kranky

Originally posted by: MrWizzard
They usually say that to try to scare the customer into keeping their account open yes it can affect your credit but so can running your credit every day.

What does that mean?

From what I understand if a loan agency sees that your credit is constantly getting run they get suspicious that maybe you are trying to get loans at other places and they will take that into consideration. To get the best loan have good credit, (obviously). Another very important thing is to be very stable in your credit activity.

WRONG

Mortgage and car loan pulls within 30days (more or less depending on how they are calculating the scores) are treated as 1 hard pull to encourage people to look for the best rates. Of course the lender can see pulls on your credit report, if they penalize you for comparing their prices with their competitors, is that really a place you want to borrow money from?

Soft pulls (just score, used for preapproved offers) have no impact.

Hard pulls (for opening credit cards, etc) have some impact, usually minimal (~5points or less for 6months, most influence if within 3months, shows up on credit report for 2years) if you have a good long credit history.

Pulls generated by you (from truecredit.com, etc) have no impact.

 

[Pabster]

Originally posted by: MrWizzard
Your credit score out here is not allowed to affect your insurance rates.

If you believe that, have I got a deal for you! :laugh:

Your advice was terrible. OP should not close any account until he understands the impact it will have. If the trade lines he closes are his oldest accounts, it will have a very great impact on his credit score; It will cause the "average age" of all his accounts to go DOWN. Shorter account history = lower credit score. This is pretty basic stuff.

I generally recommend closing an account only if it is costing you to keep it open. If you are being charged an annual fee or (worse) a monthly fee of some sort, it is wise to look at closing those accounts - taking what I said previously in to account.

Your credit score can and will affect just about everything you want in life. A low score means thousands and thousands of dollars in extra interest (ie terribly high interest rates). And it goes beyond that; You will find yourself having to put down security deposits and paying higher insurance rates. If you honestly believe the insurers "can't" use your credit score to affect your rates, you are either naive or terribly misguided.

 

[dr150]

Originally posted by: spidey07

Originally posted by: MrWizzard
If I were you I would cancel them. The impact on your credit score is pretty minimal. They usually say that to try to scare the customer into keeping their account open yes it can affect your credit but so can running your credit every day. Having to many CC open can really hurt your ability to get a loan. Most lenders will assume you will use 10%-20% of your available credit a month. So they will deduct that from your stated income. When that happens it may make them think you cannot afford the loan.

If I were you, I would close them, but that is me. How much credit do you have it you add all those cards together? Other choice is to reduce the credit amount on each card to a much lower amount.

That is terrible advice.

1) canceling the cards could have a dramatic negative affect on his score
2) Lowering the amounts would make any debt you have a greater percentage of your revolving credit - again lowering the score
3) If these are his longes accounts his active credit history is shortened, lowering the score.

This could cause a hit of 50-100 points causing thousands of dollars per year in not getting the best rates on loans, insurance, etc. Do NOT cancel those cards without understanding the negative impact it will have.

Actually having TOO MUCH CREDIT harms you.

Yes, have some cards open for the long term but don't carry huge credit limits (like I did). Every subsequent application will lower your score since your total credit limit went up (I've witnessed this personally).

 

[Pabster]

Originally posted by: dr150
Actually having TOO MUCH CREDIT harms you.

Only if your utilization is high.

Yes, have some cards open for the long term but don't carry huge credit limits (like I did). Every subsequent application will lower your score since your total credit limit went up (I've witnessed this personally).

That is because of the inquiries and/or utilization on your other credit lines, not because of "huge credit limits".

Lenders like to see lots of credit available and very low utilization.

 

[MrWizzard]

Originally posted by: Pabster

Originally posted by: MrWizzard
Your credit score out here is not allowed to affect your insurance rates.

If you believe that, have I got a deal for you! :laugh:

Your advice was terrible. OP should not close any account until he understands the impact it will have. If the trade lines he closes are his oldest accounts, it will have a very great impact on his credit score; It will cause the "average age" of all his accounts to go DOWN. Shorter account history = lower credit score. This is pretty basic stuff.

I generally recommend closing an account only if it is costing you to keep it open. If you are being charged an annual fee or (worse) a monthly fee of some sort, it is wise to look at closing those accounts - taking what I said previously in to account.

Your credit score can and will affect just about everything you want in life. A low score means thousands and thousands of dollars in extra interest (ie terribly high interest rates). And it goes beyond that; You will find yourself having to put down security deposits and paying higher insurance rates. If you honestly believe the insurers "can't" use your credit score to affect your rates, you are either naive or terribly misguided.

? Not all states allow insurance firms to consider credit scores. The practice is banned in California, for example. Call your state legislator and ask him or her to support a ban on the use of credit scores to set insurance rates in your state. Congress could amend the Fair Credit Reporting Act to require more adverse action notices by insurers, but that?s a pipe dream at the moment.

I am naive or terribly misguided huh....

EDIT: You probably will want my source here LINK At the end of the article, pretty much it says how it is used in most states, which I know, but CA is the exception.

 

[Pabster]

Originally posted by: MrWizzard
? Not all states allow insurance firms to consider credit scores. The practice is banned in California, for example. Call your state legislator and ask him or her to support a ban on the use of credit scores to set insurance rates in your state. Congress could amend the Fair Credit Reporting Act to require more adverse action notices by insurers, but that?s a pipe dream at the moment.

I am naive or terribly misguided huh....

EDIT: You probably will want my source here LINK At the end of the article, pretty much it says how it is used in most states, which I know, but CA is the exception.

And you honestly believe they all follow that law, right? :laugh:

 

[MrWizzard]

Originally posted by: Pabster

Originally posted by: MrWizzard
? Not all states allow insurance firms to consider credit scores. The practice is banned in California, for example. Call your state legislator and ask him or her to support a ban on the use of credit scores to set insurance rates in your state. Congress could amend the Fair Credit Reporting Act to require more adverse action notices by insurers, but that?s a pipe dream at the moment.

I am naive or terribly misguided huh....

EDIT: You probably will want my source here LINK At the end of the article, pretty much it says how it is used in most states, which I know, but CA is the exception.

And you honestly believe they all follow that law, right? :laugh:

Well you got me there because I do. Your credit score is linked to your social right? Can it be pulled without your social? We don't have to get that here so is that enough proof?

 

[Pabster]

Originally posted by: MrWizzard
Well you got me there because I do. Your credit score is linked to your social right? Can it be pulled without your social? We don't have to get that here so is that enough proof?

Hint: I can put something negative on your report WITHOUT your social security number.

You might want to read up on Data Mining.

 

[MrWizzard]

Originally posted by: Pabster

Originally posted by: MrWizzard
Well you got me there because I do. Your credit score is linked to your social right? Can it be pulled without your social? We don't have to get that here so is that enough proof?

Hint: I can put something negative on your report WITHOUT your social security number.

You might want to read up on Data Mining.

I think you are a little paranoid.

 

[Britboy]

Cancelling is a dumb move.

My daughter has 2 credit cards and she's 2 years old (we added her to two of our accounts). The idea being she will have a strong credit history by the time she is old enough to actually use a credit card. She was born in 05 and has been a citi card holder since 95 LOL

 

[Special K]

Originally posted by: Viper GTS

Originally posted by: MrWizzard

Why would you need 100k-credit limit?

To hold on to your money as long as possible without tanking your credit score.

Even for someone like you who pays in full every month higher limits are still helpful. Let's say you charge $1,000 a month on your credit card. You charge everything you possibly can for the cash back. Food, gas, utilities, etc. Now when your statement closes each month only a couple pieces of information get reported:

1) The credit limit (for most cards)
2) The statement balance
3) Whether or not the account is in good standing (30/60/90 late, etc).

Now given only those pieces of information what's to differentiate between you, the responsible PIF consumer and your neighbor with an equal credit limit and $1,000 balance who pays just the minimum every month (and charges something else to keep his balance at $1,000)? Absolutely nothing. Based on your credit reports alone a lender would not be able to tell you apart.

The solution to this of course is to pay off the card before the statement closes, showing a $0 balance on your statement date. Whoops, then you look an awful lot like someone who has a credit card but never uses it (which shows no ability to properly use credit). To make matters worse you're now parting with your money much sooner than you should have to.

High credit lines allow you to maximize the potential of credit without hurting your utilization (thus keeping your scores up). Having $1K in revolving debt with $99K available looks great to lenders.

What do you say to the loan people when they give you a sub par loan because of the assumed 10% of your credit limit spent each month? You can only explain away so much with them.

This is completely false.

Viper GTS

With regards to the bolded statement:

Are you saying I'm better off not paying off the full balance each month, and always making sure there's a balance on the card?

 

[erub]

Originally posted by: Britboy
Cancelling is a dumb move.

My daughter has 2 credit cards and she's 2 years old (we added her to two of our accounts). The idea being she will have a strong credit history by the time she is old enough to actually use a credit card. She was born in 05 and has been a citi card holder since 95 LOL

Hate to burst your bubble, but sorry, you missed this boat. FICO is now changing the rules to prevent this from happening. I assume you added her as an authorized user, since she would not be old enough to cosign a loan for. They know what people like you are doing, and evidently you can even rent your own credit history for cash..damn I wish I had known!

source

Personally I've been moving a lot, so I dont like having too many open cards. Because of that, I only keep my oldest card around, and the ones that I use regularly. I do currently have 4 cards with around 30K of credit, and I pay them off in full each month. Credit score is fine, 740ish I think..

 

[kranky]

Originally posted by: Special K
Are you saying I'm better off not paying off the full balance each month, and always making sure there's a balance on the card?

No. There is no scoring advantage to carrying a balance. Pay in full all the time.

 

[spidey07]

Originally posted by: Special K
With regards to the bolded statement:

Are you saying I'm better off not paying off the full balance each month, and always making sure there's a balance on the card?

Even if you pay in full you will show a balance as long as you use your card.

Getting a great credit score is easy:

1) don't ever be late, don't ever, ever, never not pay
2) have lots of revolving credit available
3) use credit responsibly - use it and pay for it
4) Have it a long time

In no particular order. I followed these very simple rules to get myself out of a bad situation and all is super rosey now.