| Owing Money on Credit Card Builds Credit |
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HardTimez
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| Owing Money on Credit Card Builds Credit |
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Supposedly, you build credit when you're getting charged with interest. So when you pay your bills on time, that's only part of the credit building process. I read this up on Consumer Reporst i think. You also have to keep a low debt in accordance to your limit. The lower ratio of debt to limit is better. So if you owe $500 in a $10,000 limit, it's good. But if you owe $500 in a $1,000 limit- you're at risk? I don't know, this is what i have been reading up. Does the number of credit cards you have affects your credit score? I don't know. Can somebody tell me?
1 + 1 = 3
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Mon Mar 07, 2005 12:14 am |
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Andrew
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They certainly don't want to see you teetering on the edge of your credit limit. That wouldn't be a good sign.
But also seems to me that having too much unused credit could be a debt liability, but I've heard varying opinions. Would like to get this one straight too...
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Wed Mar 09, 2005 8:37 pm |
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jlknauff
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The magic number is 30...
They want to see 30% or less utilization on all of your cards. Also you should have 3-5 cards
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Thu Mar 10, 2005 5:15 am |
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kingston
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| In the eyes of a lender |
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In the eyes of a lender they want to see 3-5 tradelines which can include a mix ( preferably) student loans, car loans, mortgage loans, credit cards or other installment loans
We then look for payment history how many times have you been late in the last 12 months is this due to lack of responsibility using your credit or did you suffer some form of hardship
how old these tradelines are
we like to see 24 months history at least especially if you have a severe derogatory items on your bureau like a recent foreclosure, bankruptcy, or judgment
and yes 30% utilization is key and if you need to gain ground quickly pay one of your revolving accounts down to 30% utilization
or sign on with someone with good credit as an authorized user to bump your credit scores
I wrote this from the perspective of obtaining a mortgage loan in my opinion the most in depth process for qualifying for a loan
I offer my 2 cents
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kingston111@netzero.net
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Sun Mar 13, 2005 11:29 pm |
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Rolo
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| Re: Owing Money on Credit Card Builds Credit |
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quote:
Originally posted by HardTimez
Supposedly, you build credit when you're getting charged with interest.
No. You do not have to pay finance charges for your credit card usage to show on your credit report. I never pay interest on my credit cards and my activity is reported every month. Don't forget about the ~25-day grace period before interest charges kick in.
Yes, 30% of your max balance.
Yes, applying for a mortgage is the full financial cavity search. Know what they look for and have it ready when you go to pick up an application.
I have had my total credit used against me by one mortgage company. Their logic was that I could max out all of my credit cards right after the mortgage is signed and therefore they must treat my available credit against my monthly debt/income ratio. What crap. I went to another lender and my available credit was irrelevant, only what I actually used was relevant. Hence, it depends on the lender on that one.
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Mon Mar 14, 2005 2:37 am |
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kingston
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I knew I would be seeing you around neighbor
I offer my 2 cents
Mortgage Consultant
kingston111@netzero.net
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Mon Mar 14, 2005 2:46 am |
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chiron
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Note that for some consumers, those who charge high per month then pay off entire balance (or below 30%) you may wish to look extra carefully at your credit reports prior to going for a home loan or any other major financial transaction.
Reason being, for this specific sort of person, is that the reporting cycle from creditor to bureau may not fit well with your payment cycle. So say you have a $5k max card and spend $4k (80% of max) but pay it down to $0 at the end of the month.
If the creditor reports on a cycle that doesn't match payment cycle, you may show as sitting on an unattractive 80% max rung, even though your cards are at $0 balance at the end of each billing cycle.
Business Web Site Design | Credit Report Repair
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Thu Mar 24, 2005 11:28 am |
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Rolo
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quote:
Originally posted by chiron
If the creditor reports on a cycle that doesn't match payment cycle, you may show as sitting on an unattractive 80% max rung, even though your cards are at $0 balance at the end of each billing cycle.
That is correct. I kept all mine at zero for six weeks prior to applying and ensured they were zero at closing.
One of my credit cards (Providian) shows my FICO score from one bureau, updated monthly, whenever I log into my account.
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Fri Mar 25, 2005 2:19 am |
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