Everything is a rich mans trick.


Or so I've heard.

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Be on time with payments, have no more than 5 open accounts, that includes mortgages and do not let balances exceed 10 to 20% of all the available credit you have. That seems to be the sweet spot. By doing this I have maintained my score between 800 and last I checked 822 for the last several years. Hard checks of your credit will also drop it of course.

Another thing many don't realize, outside of a DUI your credit score is likely to be the largest determining factor of the price of your auto insurance as well. Don't ask why because I don't know but my agent told me that directly. They only perform soft checks which doesn't impact your score but gives them the fico.Like your credit score has a damn thing to do with your driving ability?

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Looking to troll? Don't bother, we supply our own.

 

 

The higher your credit/income the less chance you are to file a claim on insurance.  The insurance companies know this so they charge less.

 

As far as 5 open accounts, I'm not so sure.  My wife has quite a few more open accounts than I do and as long as she's current it doesn't seem to matter with her score.

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If you are handling your money wisely, you don't need a credit score.

 

Pay accounts off and close them.

 

If you're young, you only need to borrow money for a mortgage (as you likely haven't had enough time to save to buy in cash.)  You can still get a good rate without a score, it will just take extra time and paperwork as they underwrite the loan and look at your income history.

 

Ideally, you don't need a loan for anything... but that's living unlike most do.  But again, it's what to strive for and isn't easy to commit to.  There's no immediate gratification and takes patience and time... (in addition to not going on the vacations your friends do, not driving what your friends do, living within our means unlike your friends do, etc...)

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"You do your own thing in your own time. You should be proud."

Am I the only one who thinks the Credit Score (FICO) system is a complete joke? It's like ESPNs QBR, no one is quite sure how the score is calculated.


For instance, my wife and I are looking to buy a house so I made some big payments on my Credit Cards to lower my utilization, I did not pay them off completely. Everything else remained the same. Well in doing so, my score went down 18 points....


Just ridiculous, sorry I paid you guys a couple thousand dollars.

 

It's totally stupid !!  My wife and I are both over 800 points and was told that if we shut off a few of our credit cards or request a reduction to our line of credit, our score would go down.   What the heck !!   

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It's totally stupid !!  My wife and I are both over 800 points and was told that if we shut off a few of our credit cards or request a reduction to our line of credit, our score would go down.   What the heck !!   

 

That's because a part of the equation is the ratio of available credit to how much you have utilized.  To give a simple answer I'll use simple hypothetical numbers.  Say you have a total credit line of $10,000.00 and you have a balance utilized of $1,000.00.  That means that you are using 10% of your available credit.  Now say you close a credit card account that has a credit line of $5,000.00.  You are still utilizing $1,000.00 of credit, but now you are using 20% of your available credit ($5,000.00).  So when calculating your credit score you are using more of your available credit.

 

Now there is more to it then that.  Somebody with the exact same balances earning $50,000.00 per year is going to have a lower credit score than somebody that earns $100,000.00 per year.

 

This is only a small portion of it, but hopefully it explains why your credit score will go down if you close accounts or reduce your line of credit.

 

I learned this lesson the hard way many years ago by thinking that eliminating credit cards would make my credit score better.  Now in my personal opinion, I wouldn't have more than 2 or perhaps 3 credit cards or lines of credit.  One piece of advice that I would give to people is to stay away from "unnecessary" credit cards such as department store credit cards or gasoline station credit cards.  I call them "unnecessary" because they typically can only be used at one place, and that place most likely will accept a traditional credit card such as a Visa or a MasterCard.

 

The other piece of advice that I would give to people is if you use your credit card, pay off the balance at the end of the month.  NEVER make just the minimum payment.

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There are 10 kinds of people in this world.  Those who understand binary and those who don't.

And don't forget... it's a system designed to help make decisions on giving you more debt.

 

It's not a statement of how good you are with money.

 

It's designed to determine whether or not you're likely to pay them back, and if you can handle more debt in addition to what you already owe.

 

Once you get yourself to a place where you don't need loans (even for 3-6 month "free" financing for things like tires, etc.), then put away 4-6 months of expenses in savings.  Live like that, and save for future purchases (car, roof, AC, etc...) and there's no more need for credit cards or to borrow to pay for anything.

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"You do your own thing in your own time. You should be proud."

And don't forget... it's a system designed to help make decisions on giving you more debt.

 

It's not a statement of how good you are with money.

 

It's designed to determine whether or not you're likely to pay them back, and if you can handle more debt in addition to what you already owe.

 

Once you get yourself to a place where you don't need loans (even for 3-6 month "free" financing for things like tires, etc.), then put away 4-6 months of expenses in savings.  Live like that, and save for future purchases (car, roof, AC, etc...) and there's no more need for credit cards or to borrow to pay for anything.

 

Absolutely.  I've personally reached a point in my life where I don't have much debt.  I actually still use my credit card to make more money.  I use it for pretty much all of our day-to-day expenses as well as for some bigger purchases because I get "cash back" from it.  All of that goes into my Roth IRA since I pay the statement balance every month.

 

I maintain a separate Money Market account as my "escrow" account to pay for my property taxes and home owner's insurance every year along with a few other annual expenses (auto insurance, boat insurance, etc.).

 

I maintain and carry "debt" as seen on my credit report because I pay my statement balance on my credit card each month rather than the entire balance.

 

Finally, I maintain another Money Market account (savings) that has enough to cover our expenses for more than 6 months plus it's where we pull funds for vacations, gifts, etc.  I could almost say that I pretty much "pay cash for everything", but most of it is funneled through my "cash back" credit card which in turn puts money into my retirement account.

 

My only regret is not starting this system earlier in my life.

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There are 10 kinds of people in this world.  Those who understand binary and those who don't.

Skeet, your better off closing the account or transferring to 1 card.


I worked in this credit stuff for 15 years. The score don't really matter when buying a house.


It's all about credit worthiness.


Car dealerships and cheeky salesman will talk about your credit in terms of score and numbers...but that is because they know nothing more than trying to sale you a car. Your score is not as important as your actual credit history. Rolling 30s or 60s 90s, etc.

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