Which cards to eliminate/lower limit to improve my score? (long-term goal: mortgage)

[IndyColtsFan]

Bullshit. Credit/debt is used to build wealth. Ask any business.

This.

$17k limit on a credit card, are you crazy?

Why? I have more than that and have no issues. You need available credit to boost your credit score, build wealth, etc.

The thought of that much on a credit card makes me sick to my stomach.

You don't have to use it all. I never have or will.

 

[Texashiker]

You need available credit to boost your credit score, build wealth, etc.

I would rather build wealth without the use of credit.

Some people can use credit as is should be used, but a lot of people do not know how to use credit, or otherwise abuse credit. Personally, I would rather not be tempted to use to much credit. To totally eliminate the possibility of spending too much, I do not have any credit cards.

 

[IndyColtsFan]

I would rather build wealth without the use of credit.

Good luck -- you'll need it. In the meantime, those of us who are disciplined use credit to our advantage. See the rig in my signature? Basically free due to credit card rewards and I didn't pay a single cent in interest. And that's just a tiny example.

 

[Train]

I would rather build wealth without the use of credit.

Some people can use credit as is should be used, but a lot of people do not know how to use credit, or otherwise abuse credit. Personally, I would rather not be tempted to use to much credit.

Well if you admittedly suck at managing money, then yes, stay away from credit cards.

But if you suck at managing money, you wont be building wealth very well either.

 

[kranky]

I would rather build wealth without the use of credit.

Some people can use credit as is should be used, but a lot of people do not know how to use credit, or otherwise abuse credit. Personally, I would rather not be tempted to use to much credit. To totally eliminate the possibility of spending too much, I do not have any credit cards.

OK, so we all agree that it is a personal choice, not a black-and-white situation.

Wouldn't it be best to educate people on the responsible use of credit so they could stay out of trouble, rather than recommending that people avoid the use of credit entirely since it can be a useful tool?

 

[Texashiker]

Well if you admittedly suck at managing money, then yes, stay away from credit cards.

But if you suck at managing money, you wont be building wealth very well either.

I agree.

I know people who will be poor their entire lives because they can not manage their money. Instead of staying out of debt, they stay in debt and continue to pay interest.

 

[Texashiker]

OK, so we all agree that it is a personal choice, not a black-and-white situation.

Agreed.

Wouldn't it be best to educate people on the responsible use of credit so they could stay out of trouble, rather than recommending that people avoid the use of credit entirely since it can be a useful tool?

You can lead a horse to water, but you can not make him drink.

You can only help those that are willing to help themselves.

I know people who refuse to get out of the debt cycle. They buy a car, pay it off, trade it in on another one and go back into the debt + interest cycle again. You can talk about managing money until you are blue in the face, and all it does is go in one ear and out the other.

Stay out of debt, stop paying interest and start building your own wealth.

In before "I never pay interest on my credit cards". There are other forms of debt, car note, house note, boat note,,,,.

 

[spidey07]

I agree.

I know people who will be poor their entire lives because they can not manage their money. Instead of staying out of debt, they stay in debt and continue to pay interest.

How about if my business demand keeps growing but I don't have the capital to build facilities? I can use credit/debt to build the new place but will pay a small interest fee on this capital.

But here's the thing, that new building and people will make me 10 times over the money it took to build it in just 4 years. Still think credit/debt is a bad idea?

You'd make a very poor businessman.

 

[rcpratt]

In before "I never pay interest on my credit cards". There are other forms of debt, car note, house note, boat note,,,,.

I pay interest on my car lease, but it's less than what I earn in my rewards checking account. I could pay it off in full if I wanted to right now, but I don't.

 

[Texashiker]

How about if my business demand keeps growing but I don't have the capital to build facilities? I can use credit/debt to build the new place but will pay a small interest fee on this capital.

Sometimes debt is justified and/or needed.

You'd make a very poor businessman.

Considering you know almost nothing about me,,,.

 

[Saint Nick]

My credit limit on my Discover was just increased from $1,000 to $5,000 And my credit limit on my Citi card went from $10,000 to $17,000

 

[GotIssues]

Cancel all of your credit cards, run them through an industrial shredder, burn the chips from the shredder and send them straight to hell.

The best use of credit, is credit that is rarely used.

Worst.
Advice.
Ever.

He cancels his CCs, he'll never get a mortgage, which is his goal. He doesn't get a mortgage, he's renting. Renting does not build wealth, at all. Worse yet, following this advice would put him years further behind. Length of credit affects credit scores (longer = better), and dropping off all his CCs would put that number to 0.

The key is to not use CCs beyond your means, which isn't difficult if you have an ounce of fiscal responsibility - which, as mentioned earlier, if you don't have you won't be building wealth regardless if you have a CC or not.

 

[Schfifty Five]

I have currently $45k credit limit between my cards. More in the past but some CCs autoclosed my accounts due to inactivity.

I have paid $0 in interest on those CCs over the course of 7 years. Suck it Texashiker.

 

[Texashiker]

Worst.
Advice.
Ever.

He cancels his CCs, he'll never get a mortgage, which is his goal.

There are other ways to build credit history then with credit cards.

 

[spidey07]

My credit limit on my Discover was just increased from $1,000 to $5,000 And my credit limit on my Citi card went from $10,000 to $17,000

Good. You want to increase your credit limits as much as you can.

 

[GotIssues]

There are other ways to build credit history then with credit cards.

You are right, there are, but he has a couple years of credit history on those cards already. Eliminating those WILL hurt his credit score, and require him several years to recover from it, thus hurting the chances at his stated goal.

EDIT: CCs aren't bad unless you are bad at using them. Debt in general isn't bad unless you are bad at using it. It all comes back to financial responsibility - if you have it, you'll be fine. If you don't, you won't ever build any wealth because you are always buying the latest and greatest, it's just with cash instead of financing.

 

[Texashiker]

You are right, there are, but he has a couple years of credit history on those cards already. Eliminating those WILL hurt his credit score, and require him several years to recover from it, thus hurting the chances at his stated goal.

I choose to live my life by my rules, and not the rules set by a credit agency or a bank.

If the OP can save up enough money to put down on the house, he will get approved for a loan. Walk in with 50% down, the bank would be stupid to turn down a loan with so little to lose.

 

[spidey07]

I choose to live my life by my rules, and not the rules set by a credit agency or a bank.

If the OP can save up enough money to put down on the house, he will get approved for a loan.

BULLSHIT! Stop giving out terrible advice.

I just bought a house, banks are tough on lending right now. All that matters is credit score and debt to income. That's it, that's all the lenders care about right now. Too much risk.

Cash doesn't matter, net worth doesn't matter, all that matters is credit score and debt to income ratio.

 

[Schfifty Five]

I choose to live my life by my rules, and not the rules set by a credit agency or a bank.

If the OP can save up enough money to put down on the house, he will get approved for a loan. Walk in with 50% down, the bank would be stupid to turn down a loan with so little to lose.

Rofl. Let's say he's buying a house at $200k. $100k down payment would take a fairly long time to save up for most.

 

[Train]

BULLSHIT! Stop giving out terrible advice.

I just bought a house, banks are tough on lending right now. All that matters is credit score and debt to income. That's it, that's all the lenders care about right now. Too much risk.

Cash doesn't matter, net worth doesn't matter, all that matters is credit score and debt to income ratio.

Oh c'mon you gotta give him some credit (no pun intended) 50% down is more than enough collateral for most houses.

 

[GotIssues]

I choose to live my life by my rules, and not the rules set by a credit agency or a bank.

That's perfectly fine, but you are still dispensing bad advice. Your rules are not very good for the stated purpose of wealth building.

If the OP can save up enough money to put down on the house, he will get approved for a loan. Walk in with 50% down, the bank would be stupid to turn down a loan with so little to lose.

So he'll pay rent for the next 10 years while saving up for the downpayment. So, instead of paying mortgage interest at the lowest rate in history, he'll be paying rent. It's quite plausible that his mortgage interest will be less than his rent (at least it is for most markets) and he'll be better off in every way by buying a house (assuming he's doing it responsibly, we don't know all the facts of his situation).

 

[GotIssues]

Rofl. Let's say he's buying a house at $200k. $100k down payment would take a fairly long time to save up for most.

Regardless of the house price, as long as the person is buying a reasonable house compared to his income level, it will take a long time. If he's making $15/hour doing whatever and buying a $75k house, saving up $37.5k will take forever, as you really can't save much money when you don't make much to begin with.

 

[Texashiker]

Cash doesn't matter,

And you accuse me of giving bad advice?

LOL.

So he'll pay rent for the next 10 years while saving up for the downpayment. So, instead of paying mortgage interest at the lowest rate in history, he'll be paying rent,,,,, blah, blah, blah,,

If he can not save money, he should not be buying a home.

After all, we are talking bout being responsible here, right? Being responsible does not mean carrying a lot of debt.

 

[spidey07]

And you accuse me of giving bad advice?

LOL.

I told you I just purchased a house. The bank never asked for my assets other than my current house/mortgage. I specifically said "don't you want to know how much cash or other liquid assets I have"

They said, No. They specifically told me "Credit score and DTI is all that matters. Doesn't matter if you put 70% or 20% down, doesn't matter, as long as it's at least 20%".

 

[Texashiker]

I told you I just purchased a house. The bank never asked for my assets other than my current house/mortgage. I specifically said "don't you want to know how much cash or other liquid assets I have"

They said, No. They specifically told me "Credit score and DTI is all that matters. Doesn't matter if you put 70% or 20% down, doesn't matter, as long as it's at least 20%".

Your mortgage was probably sold before the end was dry.