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OfflineCLIT
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how to build credit or keep credit excellent
    #23004670 - 03/14/16 12:51 AM (7 years, 10 months ago)

My credit is excellent. I stopped using my credit card but I was told to use it once in a while and don't let it sit unused stagnant because having debts and paying it off is what builds credit and or keep credit excellent. So what I was told to do is to use the credit card then pay off debts immediately (free of interests) without waiting for the monthly bill to come. Good idea?

Regarding those gas station credit cards where you save a few cents per gallon, are those worth it considering I'd be buying gas anyway? Do I just follow the procedure I described above? Use the card then pay it off within a week or so, so that way there's no interest fees and my credit just keeps on rising, plus I save money on gas?


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OnlineYthanA
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Re: how to build credit or keep credit excellent [Re: CLIT] * 1
    #23011629 - 03/16/16 03:58 AM (7 years, 10 months ago)

If you're concerned about your credit score, you probably don't want to close unused accounts. This is a mistake I made early on to try and simplify my finances, and it briefly hurt my credit. The average age of your accounts has an effect on your credit score, and so does your credit utilization. Both of these are positively impacted if you keep some open, unused credit lines. The best thing to do with an unused credit card is to cut it up and throw it away but leave the account open. It doesn't matter if you pay off your purchases immediately, at the end of the month, or if you don't buy anything, as long as you fully pay any balance by the statement date. Like, the difference will literally not be reported anywhere and has no possibility to affect you. I suggest you try a free site like https://www.creditsesame.com/ or https://www.creditkarma.com/ for insight and suggestions about your credit score. In general, the factors you want are a low debt:credit ratio, a high average age of your accounts, and a good diversity of loan types (ie. revolving vs. installment. Think credit cards vs. auto loans or mortgages.) It also doesn't hurt and won't cause any problems if you overstate your income a little bit on your credit card applications.

If you have the discipline to pay off your full balance every month, credit cards are an awesome financial tool. Compared to carrying cash, they insure you against theft and fraud, they offer interest-free loans until your monthly statement date, they make it dead simple to track your spending, and they frequently offer free bonus features like concierge service, warranty extensions, damaged product replacement, travel insurance, etc. Plus as you mentioned, with proper use they help build your credit score and provide cash-back or other rewards as well. The only reason to not get a credit card is if you can't trust yourself and might run up a balance and pay interest. If that's a risk, maybe stick with secured credit cards so there's always cash waiting in an account somewhere to pay for your purchases and there's no concern that you'll go too far into debt.

A card which gives you cash back for buying gas is a great idea, since it's something you probably pay for frequently, and it can get expensive. I've found that cards which give discounts at grocery stores and restaurants can also be useful. If/when you have good credit, there are some great general-purpose cards like the Citi Double Cash Card and the Fidelity Investment Rewards Amex which give you 2% cash back on all purchases. Be aware that generally speaking, cards with good rewards also have high interest rates if you carry a balance. You gotta pay your entire bill on time every month, or the interest fees will quickly wipe out any savings. With most cards, you can set up automatic online payments if you wish. I highly recommend this option if you can be sure you'll always have enough funds in your bank account, or if your bank offers free overdraft protection. Once you've got it set up properly, you completely eliminate any risk of missing a payment or being charged interest, while maintaining all the benefits that come with a credit card. Personally I've been very satisfied with my Schwab Investor Checking Account, although you have to apply with customer service and pass a credit check to get an overdraft credit line, and they don't have many physical branches which can be a problem if you need to deposit cash. Hope this helps! :smile:


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InvisibleLunarEclipse
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Re: how to build credit or keep credit excellent [Re: CLIT]
    #23011654 - 03/16/16 04:27 AM (7 years, 10 months ago)

If you ever do get a late charge, try to get it reversed immediately.  This only works if you have good credit and been paying those monthly bills on time for a year or two.  They will usually waive it if you give them some good excuse like hey I was busy earning money. 

Credit card companies HATE people like you and me who pay on time.  They call us "deadbeats".  Imagine.


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OnlinegeokillsA
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Re: how to build credit or keep credit excellent [Re: Ythan]
    #23012472 - 03/16/16 11:21 AM (7 years, 10 months ago)

Happy Citi DoubleCash cardmember and CreditKarma checker-upper here.  I'll also second Lunar's note that credit card companies have in my experience reversed any missed payment/late fee, once per year.  Likewise, banks will often reverse one overdraft fee per year as a courtesy.  All it takes is a phone call, and you don't even need to bullshit... just say, "I'm calling because I accidentally missed a payment (or overdrew) on my account and would like to request a courtesy reversal of the penalty charges."

To build excellent credit, you need multiple debt accounts in good standing (e.g. credit cards, auto-loans, mortgages, student loans, et al).  And you definitely need to keep them paid on time per the terms of the account.  Keep your debt-to-total-credit utilization below 10% and in time you should be golden.  CreditKarma has me at an 805 FICO with 7-8% credit utilization, no missed payments, no derogatory marks, 11 accounts and a 6.5 year average account age.

On the credit card rewards front, I gain a minimum 2% reward as a baseline, and up to 5% in specific categories, which typically returns anywhere from $500-$1,000 in cash back each year just for making purchases that I would make as a matter of routine living.  I prefer straight up cash back rewards programs over airline mile or gas cards because cash can be used for any of those things and the cash rewards programs provide at least a comparable (and often superior) reward return per dollar spent.


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OfflinemndfreezeMDiscordReddit
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Re: how to build credit or keep credit excellent [Re: geokills]
    #23015196 - 03/16/16 11:47 PM (7 years, 10 months ago)

Its actually better to raise your score quick to make sure you always have a small amount of debt on your cards.  Just make sure its always less then 10% but never FULLLLLY pay off your cards. 

One of the ways I built my credit fast when I was young and had no credit at all, but was planning to buy a house, was I got a small card with a few hundred buck limit on it.  I bought socks and underwear.  I spent about 40 bucks each month on it, and when my bill was due I would pay all but $10.  This way they see you have rotating debt on the card that they are making interest, but the interest is so small its negligible compared to the rise in your credit score. 

If you dont care about your score rising faster, then you can also just pay it off completely every month of course, but since they dont make any money off you other then maybe your yearly fee or whatever you might pay for your card, they tend not to like it as much and it is reflected on your credit score.


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Nothing says love like grannies prolapsed anus!

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OnlineYthanA
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Re: how to build credit or keep credit excellent [Re: mndfreeze]
    #23015664 - 03/17/16 05:40 AM (7 years, 10 months ago)

Quote:

mndfreeze said:
Its actually better to raise your score quick to make sure you always have a small amount of debt on your cards.  Just make sure its always less then 10% but never FULLLLLY pay off your cards.



Freezy! Nice to see you mang! :laugh:
I'm gonna call bullshit unless you can cite a source. This is a good way to spend unnecessary money on interest fees, but it's not going to do anything to raise your credit. It seems like it would make financial sense for credit card companies to give preference to customers who carry a balance, but I just don't think they do, and I've never seen any evidence to convince me. People in the financial community refer to this as a persistent myth. The only effect that carrying a balance has ever had on my credit score is to lower it by a few points, even if the balance is only a small % of my total credit.


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OnlinegeokillsA
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Re: how to build credit or keep credit excellent [Re: mndfreeze]
    #23016063 - 03/17/16 09:46 AM (7 years, 10 months ago)

Quote:

mndfreeze said:
never FULLLLLY pay off your cards [...] This way they see you have rotating debt on the card




Credit card companies will still report rotating debt, even if you pay off every month.  I know this because my report shows 7-8% utilization right now, and every single one of my cards is set to pay off automatically in its entirety for each statement that is issued.  I haven't confirmed this through an outside source, but this makes intuitive sense to me because there is a 25-30 day grace period after a statement is issued, so there is always some overlap between when a statement is issued and when the balance is due/paid, and if you use your card for all of your purchases, you'll be accruing revolving debt during the grace period before your prior statement's balance is paid off.  Thus, even though I pay off all of my debts within each cycle and thus pay no interest, it is extremely rare that I have a $0 balance on my card.  I second Y's notion that maintaining debt on your credit line past its due date (even after making a payment to avoid a late penalty) is not the right play.

Net, these guys should be paying you, not the other way around, so avoid paying interest if you can! :wink:


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OfflineBrian Jones
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Re: how to build credit or keep credit excellent [Re: geokills]
    #23019670 - 03/18/16 08:16 AM (7 years, 10 months ago)

I have found out from my FICO scores that they actually like you more you if you owe them money and pay them some interest. It's not the best thing for you, but it can jack your scores from the 700's to near 800.


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"The Rolling Stones will break up over Brian Jones' dead body"    John Lennon

I don't want no commies in my car. No Christians either.

The worst thing about corruption is that it works so well,


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InvisibleLunarEclipse
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Re: how to build credit or keep credit excellent [Re: Brian Jones]
    #23024021 - 03/19/16 05:42 PM (7 years, 10 months ago)

Of course they will like you paying interest.  I seriously doubt that it's going to help your credit score and more likely to hurt it by carrying a balance.


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Anxiety is what you make it.


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OfflineLoaded Shaman
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Re: how to build credit or keep credit excellent [Re: LunarEclipse]
    #23025392 - 03/20/16 04:38 AM (7 years, 10 months ago)

Quote:

LunarEclipse said:
Of course they will like you paying interest.  I seriously doubt that it's going to help your credit score and more likely to hurt it by carrying a balance.




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InvisibleMojo
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Re: how to build credit or keep credit excellent [Re: CLIT]
    #23025875 - 03/20/16 10:13 AM (7 years, 10 months ago)

Quote:

CLIT said:
My credit is excellent. I stopped using my credit card but I was told to use it once in a while and don't let it sit unused stagnant because having debts and paying it off is what builds credit and or keep credit excellent. So what I was told to do is to use the credit card then pay off debts immediately (free of interests) without waiting for the monthly bill to come. Good idea?

Regarding those gas station credit cards where you save a few cents per gallon, are those worth it considering I'd be buying gas anyway? Do I just follow the procedure I described above? Use the card then pay it off within a week or so, so that way there's no interest fees and my credit just keeps on rising, plus I save money on gas?




What are you trying to accomplish with your credit score?  Are you looking to make a big purchase?  Qualify for a Mortgage?

You actually have different credit scores depending on how the lender is scoring, for really large purchases such a Mortgage; a broker will dig into your credit to verify your credit worthiness, these individuals are trained to look past common tricks that people use to increase their credit score.  So my point is, identify what it is that you want to do with your credit score before you try to manipulate your score...

Seek out credit-specific forums on google, incredibly knowledgeable and helpful people out there who work in the credit industry and can give you the right advice for your situation.


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OfflineBrian Jones
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Re: how to build credit or keep credit excellent [Re: LunarEclipse]
    #23029095 - 03/21/16 07:54 AM (7 years, 10 months ago)

Quote:

LunarEclipse said:
Of course they will like you paying interest.  I seriously doubt that it's going to help your credit score and more likely to hurt it by carrying a balance.




I swear it did. When I was making money easily I could knock a $20,000 balance down to a couple grand in 8 months and my FICO composites were always around 730-750. Since the banking crisis, I have struggled quite a bit, have high balances, and frequently make only the minimum payments. My FICOs are now 790 to 800. Like any business they are looking for people to make money off, not people who pay their balance every month just to establish credit. They make no money off those people.


--------------------
"The Rolling Stones will break up over Brian Jones' dead body"    John Lennon

I don't want no commies in my car. No Christians either.

The worst thing about corruption is that it works so well,


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InvisibleLunarEclipse
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Re: how to build credit or keep credit excellent [Re: Brian Jones]
    #23033059 - 03/22/16 08:58 AM (7 years, 10 months ago)

Quote:

Brian Jones said:
Quote:

LunarEclipse said:
Of course they will like you paying interest.  I seriously doubt that it's going to help your credit score and more likely to hurt it by carrying a balance.




I swear it did. When I was making money easily I could knock a $20,000 balance down to a couple grand in 8 months and my FICO composites were always around 730-750. Since the banking crisis, I have struggled quite a bit, have high balances, and frequently make only the minimum payments. My FICOs are now 790 to 800. Like any business they are looking for people to make money off, not people who pay their balance every month just to establish credit. They make no money off those people.




Your logic is atrocious.  It has zero to do with your paying them interest or not.  The thing that saved you, was you were never late with a payment.  You always paid your minimum monthly payment and on time, right?  Therefore your credit didn't get dung.  In fact, I'll agree with you to the extent that by being a consistent payer, they will continue to give you even more rope, including raising your credit for being more and more in debt, until you finally hang yourself.  Had you missed payments completely, were late, or worse, had a bill go to collections, the result would have been entirely different.


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Anxiety is what you make it.


Edited by LunarEclipse (03/22/16 09:01 AM)


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OfflineCLIT
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Re: how to build credit or keep credit excellent [Re: LunarEclipse]
    #23069917 - 04/01/16 02:44 AM (7 years, 9 months ago)

I would think since there are millions of customers for the credit card companies to keep track off, they simply go by who's paying what they charge on the card and that gets "logged" and "reported" that you pay on time well. Technically it is a "debt" once you charge your card, but if you pay it off before they start charging interests that gets "logged" as a customer that pays on time. Say I bought groceries for $100 this week, I pay that off next week with a debit card, so I owe nothing, no balance, credit company looks at it as if you paid your dues/balance and that looks good on you instead of waiting for the credit card company to start charging you interests. Most of these companies seem to have an offer of no interest for a year or so but why wait for them to start charging you interests when simply paying the monthly debts, interest free, favors you? I don't even wait for the monthly bill to come, despite it's still interest free. Maybe I should wait for the bill to come?

Here's another strategy I'm thinking about; I am making car payments on time so that build my credit more, what if I charge my credit card to pay this monthly car payments so that way that's like I'm paying my car payments monthly through the credit card company, but I'll just pay off what I owe the credit card company ASAP since I use debit/cash to pay for my car payments anyway. Wouldn't this "double" my status as a paying customer? I would think so. Same goes with monthly bills, do I charge them all through my credit card then pay them off ASAP within a week, all interest free and credit keeps building.

What I don't get though is why I can't find a routing number for my credit card (just the account number). Do credit cards have a routing number or not? If not, is it done so on purpose so that way people won't build credit the way I described above (i.e. use credit card to pay ALL monthly debts and bills, then pay off the balance ASAP using a debit card (cash), etc.)? This would build credit for sure. Maybe I haven't looked hard enough for the routing number of my credit card. I do not use a check.


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OfflineCLIT
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Re: how to build credit or keep credit excellent [Re: Brian Jones]
    #23069925 - 04/01/16 02:53 AM (7 years, 9 months ago)

those companies that make money off clueless people are simply taking advantage of the clueless. Credits are built not based on how much you maxed your card out and how much interest you pay out the ass to make those companies smile. Credits are built if you pay on time, debt free, balance free, interest free. Can't build credit using cash (i.e. debit), unless you pay your water and electricity bills with it ON TIME, because if not, you won't have water or lights.

If those companies can't make money off people with a clue, then who's fault is it that they can't take advantage of everyone, right? They already made money off people who are clueless about mortgages who then end up foreclosing on their homes because they can't really afford to pay for the house in the long run (banks still got their pay, and on to sell the house to the next dummy by way of "mortgage"). The statistics are bad on how many people are sold a "dream" that turned into a nightmare. Most banks won't even lend you mortgage for houses less than $50K. Not enough money for them to make off of.

Quote:

Brian Jones said:
Quote:

LunarEclipse said:
Of course they will like you paying interest.  I seriously doubt that it's going to help your credit score and more likely to hurt it by carrying a balance.




I swear it did. When I was making money easily I could knock a $20,000 balance down to a couple grand in 8 months and my FICO composites were always around 730-750. Since the banking crisis, I have struggled quite a bit, have high balances, and frequently make only the minimum payments. My FICOs are now 790 to 800. Like any business they are looking for people to make money off, not people who pay their balance every month just to establish credit. They make no money off those people.




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OfflineBrian Jones
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Re: how to build credit or keep credit excellent [Re: CLIT]
    #23070103 - 04/01/16 05:52 AM (7 years, 9 months ago)

I'm not going to argue with anyone anymore about why companies have no real use for people who pay all their credit on time, and the company makes nothing. It seems totally obvious to me, but other people have other ideas. I know some people in the past who got credit cards to establish credit and always payed on time. They actually got dropped by the company; their account was in no way an asset to the company. This doesn't usually happen because they know they will hook you in at some point.

      Now to the topic of using credit cards to finance a car. In the late 90's I bought a 5 year old Buick RegaL. The finance lady at the dealer said, your credit is excellent but  I have to charge you 10% because the car is 5 years old.  I needed the car so I took it. In 03, I bought a 99 Jeep Cherokee (which still runs great). The Jeep was about $12,900 but I took for 15 K with the extended warranty. I financed it entirely through credit cards. It worked out great because the credit card companies were bombarding me with balance transfer offers. I could pay 2% up front and get 18-24 months of zero interest, or I could pay nothing up front and get an extended period of time at 2 to 2.99%. I paid it off in 3 or 4 years and probably paid about %3 interest.

    Now, due to underemployment and high medical bills I don't get the great balance transfer offers even though my FICOs are higher than ever, but when it worked, it worked great.


--------------------
"The Rolling Stones will break up over Brian Jones' dead body"    John Lennon

I don't want no commies in my car. No Christians either.

The worst thing about corruption is that it works so well,


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Invisiblebadchad
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Re: how to build credit or keep credit excellent [Re: CLIT]
    #23070456 - 04/01/16 08:53 AM (7 years, 9 months ago)

Quote:

CLIT said:
Here's another strategy I'm thinking about; I am making car payments on time so that build my credit more, what if I charge my credit card to pay this monthly car payments so that way that's like I'm paying my car payments monthly through the credit card company, but I'll just pay off what I owe the credit card company ASAP since I use debit/cash to pay for my car payments anyway. Wouldn't this "double" my status as a paying customer? I would think so. Same goes with monthly bills, do I charge them all through my credit card then pay them off ASAP within a week, all interest free and credit keeps building.




That's exactly what I do. Every possible bill that can be paid with a card is paid that way.

The logic is that I get 1% back, and I don't have to worry about missing a payment.


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...the whole experience is (and is as) a profound piece of knowledge.  It is an indellible experience; it is forever known.  I have known myself in a way I doubt I would have ever occurred except as it did.

Smith, P.  Bull. Menninger Clinic (1959) 23:20-27; p. 27.

...most subjects find the experience valuable, some find it frightening, and many say that is it uniquely lovely.

Osmond, H.  Annals, NY Acad Science (1957) 66:418-434; p.436


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