240meowth

Hello Zilvia, I'm new here.

As an old man, I wish I had more financial knowledge when I was younger. I was hoping maybe open up a channel for newbies to learn and experts to impart their wisdom. And maybe together we find a way to out-smart the system and buy some rota wheels with LED washers.

Here's what I know so far to get awesomesauce credit score by stealing sources from CreditWise; mainly six categories:

Payments Made on Time
BELOW AVG 0% - 1%
AVERAGE 2% - 59%
GOOD 60% - 89%
EXCELLENT 90% - 100%

Credit History:
BELOW AVG Less than 2 years
AVERAGE 2 - 7 years
GOOD 8 - 25 years
EXCELLENT More than 25 years

Credit Used:
BELOW AVG More than 60%
AVERAGE 30% - 59%
GOOD 10% - 29%
EXCELLENT Less than 10%

Credit Inquiries:
BELOW AVG More than 5
AVERAGE 3 - 5
GOOD 1 - 2
EXCELLENT None

New Accounts in past 2 year:
BELOW AVG More than 6
AVERAGE 5 - 6
GOOD 3 - 4
EXCELLENT Less than 3

Available Credit:
BELOW AVG Less than $2.5K
AVERAGE $2.5K - $15K
GOOD $15K - $50K
EXCELLENT More than $50K



Now, how to get a high roller Centurion? Or even establishing 50k+ credit limit?! As we can see, amount of credit available and amount of credit usage is significant. I have 2 cards:

Chase Freedom - 5500 Limit
CapitalOne Quicksilver - 6500 Limit

Do some cards give higher credit limit than others? What's your ridiculous credit limit like?

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dbeiler

Excellent subject. About time we got some more adult type threads here.

Considering the insane amount of Americans with credit card debt, I can't believe how uneducated most of them are regarding their cards and credit.

Some people actually believe that their credit score will not increase unless they carry a balance on their card. That is absolutely false. For those unfamiliar with credit lingo, "carrying a balance" means not paying the full statement balance by the due date. It refers to the amount left over that you will be PAYING INTEREST ON.
Some people believe paying their phone bill or utilities will improve their credit score. This is also false. None of my monthly bills have ever been reflected on my credit report.

I did not start building credit till I was 19. I realized the importance of credit due to some helpful advice from my bank USAA (United Services Automobile Association) and some required personal finance training in the military. Unfortunately I didn't have anyone to cosign for any decent cards at the time, so my only option was to apply for a low limit, prepaid card that actually charged an annual fee. If I remember correctly, it had a $300 limit and began my score at 500ish. I followed every credit rule to the T, used only a small percentage of my available credit, and always paid my balance in full before the due date. A year later, I was finally eligible for better cards. I applied for and received a Discover card (which I still use today) and got rid of the crappy prepaid card shortly after. I have since added a USAA card and PNC card as well.

Each of my current cards started with a $2K limit which was then gradually increased to a $10K limit each. They are kept strictly for emergency funding. Paying interest on credit card debt is incredibly expensive and it blows my mind to see people live in debt with no remorse.

My credit score has been stuck at 780 for almost 2 years now. I don't know how to get to the 800s. Must I simply wait 20years?

The amount you can borrow on a loan is usually based on income. The interest rate you'll pay on the loan is based on your credit score. Building credit is VERY important and can save you a ton of money in the long run.

enkei2k

I only have 1 CC...it's at 12k limit card. Back when I applied for a card in college in 2003 it was easy (pre financial collapse). Started with a 3k limit, then it was upped to 5k, then 10k, and now at 12k. It was so easy, all it took was a click of a button to get an increase. Now they ask for your income, etc...

The only way I've seen to get into the 800 realm is to own a house and pay mortgage. Pay it off and then you'll reach the holy grail.

I always pay off my credit card on time, paid off all my student loans early in 4 years time, and will almost be done with my car note. I'll have to double check when I pay off my car how much it'll up my score but now I'm at the 740s.

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Ask enkei2k

xquizitditz

NiSilS14

you can probably get a 50k card if you make over 500k annually and already have excellent credit. Cumulatively my four cards have a 30k limit, my biggest one being 15k. I've been building my credit since I was 18, have never missed a payment, and did my best to not max them out. Credit limits are based on your income, credit history, and sometimes your debt to income ratio.

STEEZxIT

good thread.

i would add that credit karma is an excellent, free tool for monitoring and understanding your credit.

credit wise is awesome too, for those with capital one. (they also have one of the best checking account options, but thats a bit off topic)

it's interesting that this isn't taught in high school (at least not in california).

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@dangerdamian

240meowth

This was what I was told as well. I have to agree with you completely, carrying a balance is very stupid unless you have 0% APR. For example, When I applied for a new card I had 0% APR for 1 year; so I paid the minimum balance on it monthly. MEANWHILE: I had the complete pay-off amount sitting in a savings account that was receiving interest. As soon as my 0% APR expired, I paid everything off.

For those of you with 10K+ credit limit on a card; what type of card is it? I'm trying really hard to increase my credit limit on cards but for Chase Freedom the increase request is a "hard" inquiry on the credit which will impact your credit score.

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cbeuglas

The biggest issue with people and credit cards is that they don't budget the card. The way I was taught was if you don't have the cash to pay for it a credit card is not a substitute. It is the same as cash. Example if you have $500 in your bank account and are planning a purchase and use a credit card. Make the purchase with the card and use the cash to pay off the card. Where people get in trouble is they put $500 on the card but still spend the cash also. This is where the debt starts and hurts your credit.

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cbeuglas

If I need to make a large purchase and I have a card that is 0% interest for 6 months. I will divide the total by 5 months and consider that in my monthly budget as money spent already.

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cbeuglas

The other credit issue is a check card is in no way going to help you build credit. I refuse to use check cards as you have little protection from the bank. If there is a a charge you did not make with a check card the money is already gone, and you have to fight to get it back. I some cases if it takes too long you will not pay your other bills as you are waiting for the bank to return your money. Late bill payments = hurt credit score.

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cbeuglas

My best sugge

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cbeuglas

My best suggestion to start building credit is a gas station only card (not a credit card). As long as you pay the bill completely every month you can start building credit and not get in too much financial trouble.

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240meowth

This is not a true statement; check cards with visa/master/etc. logo on them gets the same security as credit cards.

There is a movement out there backed by a finance guru named Dave Ramsey who argues you should never use a credit card because you fall into a trap of paying up to 25% interest and hell.

However, I do agree with you that check cards are not the best way to go about. Credit cards can sometime give you perks such as cash-back; whereas check cards do not. Just don't ever carry a balance!

Do keep in mind: many people, myself included, tend to spend more than they want on credit card because "oh i get 1% cash back". This is the same mentality as "oh, rota wheels are 90% off i'll buy 50 of them in case one breaks". You don't spend money on things you don't need just to "save money".

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cbeuglas

<br />
For those of you with 10K+ credit limit on a card; what type of card is it? I'm trying really hard to increase my credit limit on cards but for Chase Freedom the increase request is a "hard" inquiry on the credit which will impact your credit score.

Here is my question why does it matter if your credit card is over 10k? Would you have 10k to pay it off at the end of the month? If you are making 10k a month you are the man!

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KAT-PWR

Don't buy things you don't have the money for
Pay your bill early, consider paying bills on time as being "late"

I just got my first credit card at 22 maybe 6 months ago and I'm up to a 710 credit score. I would consider this my biggest financial mistake. However I have a growing stock portfolio I started putting money into at 20.

A PENNY SAVED IS A PENNY EARNED... YOU MUST MUST MUST SAVE MONEY THERE IS NO EXCUSE AND NO REASON NOT TO.
MAKE
A
WAY

A higher credit limit lends more credibility in the financial realm.
This is valuable for future large purchases like houses and cars.
Also knowing if worst case something happened you could float yourself comfortably through hard times if absolutely necessary.

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MRP Manufacturing

cbeuglas

Here is my difference between credit and check cards.
Check card: if someone get the number and runs up the card the checking account is empty.
Credit card: if someone get the number and runs it up you read the statement and see its not your charge you call and dispute it. No payment on the stolen number $ has to be made till resolved.

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cbeuglas

I do agree that you should never pay 25% interest, but if you can not afford to pay the balance off at the end of the month don't make the purchase. Also as an example would you buy a car at 25% interest? If you don't like the terms don't buy the car. It is the people's resoncability to read the term and conditions, and make the decision that is in there best interest.

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cbeuglas

Here is the way I view credit limit. Please understand I am a 40 year old man and have been working for a long time. I balance my budget to save money monthly for such an emergency. The best I can say is try to spend less than you earn as financial decisions in life are going to happen. It still revolves around a balance of incoming and outgoing. The best financial advice I ever received is alwase carry 3 months take home salary, as you never know what can happen.

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240meowth

The main reason for high credit limit is that it is a the key factors in determining credit scores. More available credit = higher credit score.

Having high credit limit puts you at risk of not being able to pay it off; but to lenders if you have credit limit available to you this means some other lender trusts you with money.

I understand, different type of cards also yield to different credit limit range. Hence, I'm curious about those who have large credit limits; what's in their wallet.

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Mister.E

Ohhhh, a thread where I might be able to give some actual insight. Subbed for later posting.

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: @e_lemonation

zeitgeist

Treat your credit card like you debit card, and rarely if ever use your debit card

Over time youll get offers through your bank with better rates and higher limits

Every paycheck you get, pay yourself with savings, retirement, stocks, or whatever

If you dont have a retirement account by the age of 19, you are wrong

And keep 6 months pay in savings always. When a recession hits or you have an accident, youll still be able to pay bills and create some buffer time

Only marry a spouse who is financially dependable

Dont buy a brand new car unless you are doing very well and you have money to burn. It's a complete waste of money

cbeuglas

I like this guy!

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cbeuglas

Building credit is like starting a new career. You start at the bottom until you prove yourself. I have plenty of friends who have nicer cars than me but no savings. I would rather drive an older car and have the savings if needed. The other factor is I have no kids so that must be in the equation. I just would rather have older cars to do what I want than newer cars that I can void the warranty.

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cbeuglas

Like I said as far as credit goes. If you do not have the money to pay for it don't buy it.

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cbeuglas

There is a guy on the radio here in Atlanta that says if you can't afford to do a 3 year loan on a new car you should not buy it. This makes sense as the rate of how a car depreciates. You will be in the hole from the beginning.

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Mister.E

This is the most sound advice that anyone could ever give. I never buy anything on credit unless I have the money to pay it off right away. Don't live on credit, the interest can be a killer.

If you play the game right you can come out on top. Just last week I financed a new Honda Fit for my wife and when they pulled my credit report it was an 814. I don't know quite how I made it that high on the scale but it's reassuring knowing that you can finance or get a loan for basically anything if the need arose.

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: @e_lemonation

ZenkiKid

I made the mistake of building my credit after college. I had no choice but to use a secured CC with a $500 limit for almost a year before I could qualify for an unsecured card due to my student loan.

I now have a 760 credit score and my total CC debt is very very manageable.

I always followed the rule of thumb in terms of using my CC. If I cant afford it outright then don't even bother. I use my CC for everything thanks to its rewards. ( Capital One Quicksilver)

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japslapsilvia

Over 800 score is easy, just takes time. What i have done is taken out several cards over the course of 10 or so years. I rotate my cards every couple of months. Typically keep 2 on me all the time, use them for everything.

Here is the key, PAY THEM OFF EVERY MONTH. Never carry a balance.

Same with car loans, pay them til maturity, or at least 6 months left, then pay them off, Credit score tends to increase closer to a maturity of a loan, At least in my experience.

Treat Credit cards like cash, if you cant cover the bill at the end of the month, dont buy it.

My credit score was 820 around 2009 when i bought my first new car (sole buyer on contract). That was my first "Big debt". totaled car in 2012, had only a few months left to pay on it. Bought new model in 12, score was 850. Car was paid off 2 months prior to maturity (3 yr contract).

Bought first house April of this year, Score was 840.

Point is Money Management is Key, dont over spend. No need to live beyond means.

Simple as that.

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bmaddock

Any advice on how to start doing this?

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Mister.E

+1

I would love to invest but have no idea where to start. Starting a credit line was easy because nothing is really at risk.

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: @e_lemonation

Cash

Start with ETFs. They typically have super low fees relative to mutual funds, can be traded just like securities, and allow you to diversify without buying several different stocks. There are index ETFs like SPY and VOO which follow the S&P500, and there are sector ETFs if you wanted to diversify within a specific sector. There are even ETFs comprised of short positions if you anticipate a bear market.