Credit advisor just tell me a bunch of BS...?

[Wolf3]

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@Anonymous wrote:

Wolf,

When you say pay early, you mean pay it off before the statement cuts or just a majority of it? My FICO score for experience is 773 and TransUnion is 746. I think I got it that high from following the "staying below 10%" theory. Two years back when I started caring about credit and got my secured BoA card, my scores were in the upper 500's.

Any idea why people would say to spend under 10% and at most 30% to get the best possible points per month if it's not true? Reason I'm worried about this now is because I recently applied for some auto loans (with a 30% down payment) and I got turned down by each due to having low CL's which meant I'm 'inexperienced' with money to them. So I've been trying to raise my CL since it appears to have substantial importance. I want to get an AMEX and VISA CC so I have more revolving accounts and credit but I've also been told it's bad to open up accounts that close together in time.

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FICO score is tiered.   Points awarded , <10, <30 , <50, etc. which were the numbers come from.  For maximum FICO score you need to control the balances that are reported on your credit report.   You can do this by paying some or all before the statement cuts(usually).   Some report at end of month so you watch that date.     The very best explanation of maximizing your score with this method is often posted by  marinevietvet. 

Many confuse this with how much they spend.   The CC companies would prefer that you use their card a lot, and not the other guys.   Spending more than the 10% or 30% and PIF develops trust and shows you can handle the credit.    If you don't show enough usage, you look too inexperienced. 

IMO,  you need to use the cards a lot more for your normal expenses, and develop higher CL.  Only current utilization is used for FICO score so watch it carefully when you are going to apply for credit or CLI, and don't worry about so much at other times.

Adding another major card is OK, but I think you should apply for 1 card at a time.

[Anonymous]

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@Anonymous wrote:

Any idea why people would say to spend under 10% and at most 30% to get the best possible points per month if it's not true?

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You want to have less than 10% or maximally 30% reported to get the best FIco score. "Reported" is not the same as "spent". At the moment, I try to get Chase to move up from the ridiculous credit limit they gave me. This month I charged the card up to 90%, but then immediately paid it as soon as this amount appeared on my account. I would not let this report as this would make my score tank. Whether Chase gets the hint is another question. I will see. If not, I won't use the card next quarter.

[Anonymous]

Very interesting, definitely makes things clearer. I greatly appreciate it.

So for the best chance at raising my CL should I be spending just under the CL every month but pay it off with 10% or less before statement closing? Don't think I could manage such a task, I'd run out of things I'd need before I spent that much money if that's the case. 

[Anonymous]

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@Anonymous wrote:

So for the best chance at raising my CL should I be spending just under the CL every month but pay it off with 10% or less before statement closing? Don't think I could manage such a task, I'd run out of things I'd need before I spent that much money if that's the case. 

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Be warned, ramping the card up to 90% is a bit risky, as they might report it immediately. Some companies report additional times to the CRAs if something unusual happens. That's why I paid the money back immediately after it showed up online on my account.

Hmm, if you don't manage to spend $500 in a month without difficulties, that might be the main reason why BoA doesn't want you to give a higher limit. Some banks have very strict correlations of income to credit limits, whereas others are more lenient. Some credit unions dish out very high limits, especially NFCU (if you qualify) or PSECU. You could try your luck there.

[Anonymous]

Great, thank you very much for all your help as well as the others. 

One last thing, how long should I wait before applying for another CC if I got my most recent one a month ago? I've heard 6 months to a year but I've also heard it doesn't matter... but I find that hard to believe. Ideally I want to have 4 cards: Discover (have it), Mastercard (have it), AMEX, and VISA. I've also read around that it's a good idea to have a Store CC... any truth behind that? Don't see why it'd be necessary.

Thanks again.

[Wolf3]

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@Anonymous wrote:

Great, thank you very much for all your help as well as the others. 

One last thing, how long should I wait before applying for another CC if I got my most recent one a month ago? I've heard 6 months to a year but I've also heard it doesn't matter... but I find that hard to believe. Ideally I want to have 4 cards: Discover (have it), Mastercard (have it), AMEX, and VISA. I've also read around that it's a good idea to have a Store CC... any truth behind that? Don't see why it'd be necessary.

Thanks again.

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It is a bad idea to spend extra to show usage.   Also you may want to limit yourself to 80% maximum in the beginning.   Going from 10% to 90% looks like you have financial trouble.   And you never want to go over limit, so don't get too close.

Applying for a lot of credit at the same time raises flag.   I would wait another month or 2 in your case. 

Four cards is a good number, certaintly enough for good score.  Store CC are good if you are a frequent customer and like the rewards and discounts etc.  Some are co-branded which is nice.   There is no real credit advantage to having one instead of a major card.

[Anonymous]

Awesome, thank you so much for the valuable information!