Rant -- The Credit system gets me sometimes

[Lotheron]

So to preface this, my credit is decent. I'm still trying to repair some bad decisions from a few years ago that have lowered my credit score a bit. Not detremental, no Chapter 11's, 13's or anything, but a few late payments that I should have not let slip by. I dont have any dings in 2+ years, which is helping I'm sure, even though they're still on there.

Anyhow, I have one of those revolving, check your credit report accounts and I have been doing so as of late trying to raise it a bit. The one I have gives advice as to what might be lowering my score and what to do to raise it.

As of 3 months ago, I had no credit cards, but I did have a auto loan, a few school loans, and whatnot, so I do have history. One of the advice that was "lowering" my score was that I didn't have any major credit cards.

So I applied and got a Visa card, and also a Walmart card just to help out.

This month I get two "lowerings" Including, my limits aren't high enough (duh its my first card) and I'm using too much of my available credit on my card.. $76/$320 is all I've ever put on the Walmart Card... The Visa card is higher limit than my Walmart card, but have only ever put about $20 a month.

I guess you're damned if you do, damned if you dont..

On a side note, anyone have any advice.. or just keep using and paying off the credit cards/loans?

 

[dullard]

Sounds like you are on the right track.

Originally posted by: Slashur
just keep using and paying off the credit cards/loans?

Yep. Time is all it takes now. In a year or so, you might want one more CC. But that can wait. You don't want to apply for too many things all at once.

 

[Dulanic]

Doesnt even matter if you use it and pay it off. Just use it once every few months so that the banks dont close them (some do after 1-3 years). Basically just keep doing what you are, over time get another card maybe in 6 months or a year.

Your credit report has no record of if you used the card and paid it.... as long as it has a $0 balance or is paid without being late it will show as paid on time. I have a Capital One card I have not used in 5 years but keep it cause it is my oldest account and it shows as on time payment every month. All that gets reported is your Limit, Balance, When it was opened, and if you had a late payment each month, oh and usually your highest balance on the card.

 

[Descartes]

The utilization (balance to limit on your CCs) is what's killing you. You're approaching 30% with the example you've provided, and that's enough to kill your score by quite a bit. Given that they are low-limit cards there isn't much you can do unless you don't use them, but just pay them off and you'll be fine.

There are somewhat questionable ways you can have the late pays removed, but I would go over your report and make sure there are no inaccuracies. If the dates are wrong, amounts are wrong, etc. you could really be affected.

Other than that just keep paying everything on time. I had to go through it as well when I was younger.

 

[Lotheron]

Originally posted by: Descartes
The utilization (balance to limit on your CCs) is what's killing you. You're approaching 30% with the example you've provided, and that's enough to kill your score by quite a bit. Given that they are low-limit cards there isn't much you can do unless you don't use them, but just pay them off and you'll be fine.

There are somewhat questionable ways you can have the late pays removed, but I would go over your report and make sure there are no inaccuracies. If the dates are wrong, amounts are wrong, etc. you could really be affected.

Other than that just keep paying everything on time. I had to go through it as well when I was younger.

30% is enough to be "too high" ? I was told it was closer to 50%?

Does it count that I Paid that amount off in one payment? Probably not I know, but heres a question:

What is better, paying it off completely every month or carrying a balance and paying that balance down every month.. is there a difference, is either better or worse?

 

[FoBoT]

just pay your debts, quit trying to get all fancy

 

[dullard]

Originally posted by: Slashur
What is better, paying it off completely every month or carrying a balance and paying that balance down every month.. is there a difference, is either better or worse?

For your credit score, there is no difference as long as you pay on time (remember the scoring companies are NOT the CC companies and do NOT profit from interest). For your pocket book, one of the two options charges you an arm and a leg. I'll let you decide which is which.

 

[Dulanic]

Originally posted by: Slashur

Originally posted by: Descartes
The utilization (balance to limit on your CCs) is what's killing you. You're approaching 30% with the example you've provided, and that's enough to kill your score by quite a bit. Given that they are low-limit cards there isn't much you can do unless you don't use them, but just pay them off and you'll be fine.

There are somewhat questionable ways you can have the late pays removed, but I would go over your report and make sure there are no inaccuracies. If the dates are wrong, amounts are wrong, etc. you could really be affected.

Other than that just keep paying everything on time. I had to go through it as well when I was younger.

30% is enough to be "too high" ? I was told it was closer to 50%?

Does it count that I Paid that amount off in one payment? Probably not I know, but heres a question:

What is better, paying it off completely every month or carrying a balance and paying that balance down every month.. is there a difference, is either better or worse?

No difference except that your utilization is higher if you don't pay it off, and with your low limits its just better to pay it off.

And yes 30% does lower it (not a HUGE amount, but noticable). Anything about 10% or so does, but sitting at 20% or 30% wont tank your score, 50%+ will.

 

[Lotheron]

Originally posted by: FoBoT
just pay your debts, quit trying to get all fancy

I'm not really trying to get fancy, I'm paying my debts, i'm just trying to make myself more credit worthy.

 

[Lotheron]

Originally posted by: Dulanic

Originally posted by: Slashur

Originally posted by: Descartes
The utilization (balance to limit on your CCs) is what's killing you. You're approaching 30% with the example you've provided, and that's enough to kill your score by quite a bit. Given that they are low-limit cards there isn't much you can do unless you don't use them, but just pay them off and you'll be fine.

There are somewhat questionable ways you can have the late pays removed, but I would go over your report and make sure there are no inaccuracies. If the dates are wrong, amounts are wrong, etc. you could really be affected.

Other than that just keep paying everything on time. I had to go through it as well when I was younger.

30% is enough to be "too high" ? I was told it was closer to 50%?

Does it count that I Paid that amount off in one payment? Probably not I know, but heres a question:

What is better, paying it off completely every month or carrying a balance and paying that balance down every month.. is there a difference, is either better or worse?

No difference except that your utilization is higher if you don't pay it off, and with your low limits its just better to pay it off.

And yes 30% does lower it (not a HUGE amount, but noticable). Anything about 10% or so does, but sitting at 20% or 30% wont tank your score, 50%+ will.

Yeah I just end up paying it off and not keeping a balance. I'm sure if I just keep it up the credit score will eventually go up.. It's not that bad now, but could be better.

 

[spidey07]

I know I'm gonna get shot for this...

Carrying a small balance seems to help your score slightly. Although this goes against everything I've ever read or learned about credit.

From FICrg
"Whether you are showing a balance on certain types of accounts. In some cases, having a very small balance without missing a payment shows that you have managed credit responsibly, and may be slightly better than carrying no balance at all. On the other hand, closing unused credit accounts that show zero balances and that are in good standing will not raise your score.
"

http://www.fico.org/ScoreBreakDown/AmountsOwed.aspx

 

[QED]

Originally posted by: spidey07
I know I'm gonna get shot for this...

Carrying a small balance seems to help your score slightly. Although this goes against everything I've ever read or learned about credit.

From FICrg
"Whether you are showing a balance on certain types of accounts. In some cases, having a very small balance without missing a payment shows that you have managed credit responsibly, and may be slightly better than carrying no balance at all. On the other hand, closing unused credit accounts that show zero balances and that are in good standing will not raise your score.
"

http://www.fico.org/ScoreBreakDown/AmountsOwed.aspx

That shouldn't come as a surprise at all...

The whole point of the credit scoring system is to evaluate how well a potential borrower handles debt-- not how well they can avoid it.

I mean seriously... how hard is it make sure you make payments on time when your balance (and hence payment) is already zero??? It takes no effort at all... the real test is when the borrower has to actually put a check in the mail.

And to the OP... your credit score went down for a few reasons-- but they should all be temporary. You took a hit when you applied for a credit card and they ran a credit check. You took a hit when your oustanding balance to available balance ration went from 0 to 30% (around 5% is ideal). You took a hit when your newest account is under a month or two old. You also took a hit because the average age of all of your accounts went down with the opening of this new account.

My advice would be to get yourself one or two more cards NOW with no monthly or annual fees. Use each card once a month to make a small purchase-- such as a pair of jeans or something-- and pay off the entire balance at the end of each month.

 

[Tom]

Why would a person have to have a balance to make monthly payments ?

I mean, I make monthly payments that are pretty sizeable, but I don't carry a balance. I pay off my cards every month.


I'm not asking because I care about my credit score, it's fine as far as I know, but I don't follow the logic of why keeping a balance shows a person is more responsible ?

I can see where it shows theperson is more gullible , and willing to throw money away , which are things that banks are looking for in a customer, I bet.

 

[QED]

Originally posted by: Tom
Why would a person have to have a balance to make monthly payments ?

I mean, I make monthly payments that are pretty sizeable, but I don't carry a balance. I pay off my cards every month.


I'm not asking because I care about my credit score, it's fine as far as I know, but I don't follow the logic of why keeping a balance shows a person is more responsible ?

I can see where it shows theperson is more gullible , and willing to throw money away , which are things that banks are looking for in a customer, I bet.

I don't know if you are aware of this... but the credit card companies do not necessarily report your "end of the payment cycle" balance to the credit bureaus-- they report your balance as of that particular day.

So even if you pay your credit card in full every month, your report will not likely reflect a zero balance. It all depends on when you make your purchase, when you pay the balance, and when the credit card company reports it to the bureaus.

The only surefire way to get a zero balance shown on your credit report is to not have a balance at the start of the month, and not use the card at all. Which is why having zero balances do not necessarily help your credit score-- the people that have them are people not using their credit cards at all.

 

[dullard]

Originally posted by: spidey07
I know I'm gonna get shot for this...

Carrying a small balance seems to help your score slightly. Although this goes against everything I've ever read or learned about credit.

You are misinterpreting the FICO page. The credit companies ask the credit cards what your CURRENT balance is and NOT your end of the month balance. If you charge up in a month, and pay it off in full each month, the chance is pretty small that your balance on any given day is zero. They don't base your credit score on your end of the month balance. Thus, your point is useless, someone who uses the credit card and pays it off in full WILL have a small balance and get the small boost you talk about.

MathMan had it right, I just wanted to back him up.

 

[Tom]

Originally posted by: MathMan

Originally posted by: Tom
Why would a person have to have a balance to make monthly payments ?

I mean, I make monthly payments that are pretty sizeable, but I don't carry a balance. I pay off my cards every month.


I'm not asking because I care about my credit score, it's fine as far as I know, but I don't follow the logic of why keeping a balance shows a person is more responsible ?

I can see where it shows theperson is more gullible , and willing to throw money away , which are things that banks are looking for in a customer, I bet.

I don't know if you are aware of this... but the credit card companies do not necessarily report your "end of the payment cycle" balance to the credit bureaus-- they report your balance as of that particular day.

So even if you pay your credit card in full every month, your report will not likely reflect a zero balance. It all depends on when you make your purchase, when you pay the balance, and when the credit card company reports it to the bureaus.

The only surefire way to get a zero balance shown on your credit report is to not have a balance at the start of the month, and not use the card at all. Which is why having zero balances do not necessarily help your credit score-- the people that have them are people not using their credit cards at all.

Oh, ok. Well that makes sense. Then it isn't really necessary to carry a balance, which to me means you don't pay it off, to have it show up that you are being responsible.

 

[HOWITIS]

your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

 

[spidey07]

Originally posted by: HOWITIS
your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

low rates on loans/lines of credit of any kind is why I maintain a high score. I also helps for when prospective employers run a credit check

 

[Howard]

Originally posted by: HOWITIS
your an idiot

 

[DAGTA]

Originally posted by: HOWITIS
your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

A good credit score can mean the difference between a 3.9%APR car loan and a 18% APR car loan. Likewise, it can mean the difference between a 6% mortgage and a 9.5% mortgage.

 

[HOWITIS]

Originally posted by: spidey07

Originally posted by: HOWITIS
your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

low rates on loans/lines of credit of any kind is why I maintain a high score. I also helps for when prospective employers run a credit check

ya thats a good plan. you should never take out credit. and doing so to get lower interest rates on house payments? thats crazy.



credit = bad.



don't get a good credit score because you dont need credit. in fact, credit is one of this countries main problems with everyone going in debt to buy cars or something else that has no meaning

 

[HOWITIS]

Originally posted by: DAGTA

Originally posted by: HOWITIS
your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

A good credit score can mean the difference between a 3.9%APR car loan and a 18% APR car loan. Likewise, it can mean the difference between a 6% mortgage and a 9.5% mortgage.

if you cant afford to buy the car dont take out a loan. this is more accepted stupidity in america.

 

[spidey07]

Originally posted by: HOWITIS
ya thats a good plan. you should never take out credit. and doing so to get lower interest rates on house payments? thats crazy.



credit = bad.



don't get a good credit score because you dont need credit. in fact, credit is one of this countries main problems with everyone going in debt to buy cars or something else that has no meaning

You'll learn someday. Managing credit wisely = wealth. Low interest rates and beating them through investing = wealth.

Let's say you want to start a business and you want 100K loan.

Well since you have such a crappy credit score you're paying 11% while I'm paying 5%.

Who's business is more likely to succeed? Mine or yours? I can tell you which one will be more profitable.

Seriously, your attitude is going to severely hamper your life later on. Just trying to help. And it is going to cost your thousands if not 10s of thousands of dollars a year.

 

[DAGTA]

Originally posted by: HOWITIS

Originally posted by: DAGTA

Originally posted by: HOWITIS
your an idiot for caring. taking out credit of any kind causes nothing but trouble. the only time. ONLY TIME, to use credit is when buying a house, and if you have good payment histories on rent, savingings and a job you can get a good underwriter so why in the hell do you even care.




all fico does is tell creditors how likly your are to take out credit, and then to pay them. why would you want a high score?

A good credit score can mean the difference between a 3.9%APR car loan and a 18% APR car loan. Likewise, it can mean the difference between a 6% mortgage and a 9.5% mortgage.

if you cant afford to buy the car dont take out a loan. this is more accepted stupidity in america.

Great idea... but it doesn't work for most people. My car allows me to make a lot more money than I would if I either didn't have a car or I had an older and less dependable car.

That's just the way it is.

 

[HOWITIS]

Originally posted by: spidey07

Originally posted by: HOWITIS
ya thats a good plan. you should never take out credit. and doing so to get lower interest rates on house payments? thats crazy.



credit = bad.



don't get a good credit score because you dont need credit. in fact, credit is one of this countries main problems with everyone going in debt to buy cars or something else that has no meaning

You'll learn someday. Managing credit wisely = wealth. Low interest rates and beating them through investing = wealth.

Let's say you want to start a business and you want 100K loan.

Well since you have such a crappy credit score you're paying 11% while I'm paying 5%.

Who's business is more likely to succeed? Mine or yours? I can tell you which one will be more profitable.

Seriously, your attitude is going to severely hamper your life later on. Just trying to help.

3


hamper my life? you've been hampering yours. go ahead and borrow 50k to buy a car. or 30, or whatever.



you spend your life giving someone else your money. you never have anything making payments. my money is saved while yours goes to your debtor.


you brag about your 6% interest rates. mine is 0. which is better?