@Red1Blue wrote:
How does the Holiday spending effects? I always do PIF and keep very low balance. But due to Holidays my balance might go up but I'll still will be doing PIF. My total Available credit limit is around $80K and my balances might go upto $10K but will be paid in full right after the statments cut. Is it going to spook the creditors or will they normally consider the holiday spending as normal at this time of the year and give a break? I dont want to spoof the card issuers. Any ideas?
Excellent point and question, concord. And this is a point I have tried to inform people about previously.
I believe that keeping a perpetual "tweaked" high score is bad for your credit overall. Yes, you read me correct and no I did not typo.
CCC's monitor and establish "trends" "patterns" and "spending habits." Anything out of the norm may alarm them. Thus, when you perpetually keep ultra low balances, low utilization and PIF, you establish a very narrow band of spending patterns and useage trends.
And then when you do decide to make use of your CC's or credit for responsible and/or necessary use, you immediately come up on the radar, because you go from having no reported balances to a proportionately high balance....you go from always PIF to carrying a balance...you go from a historically narrow band high FICO to suddenly a drop in score. All of these factors can be perceived as a red flag and possible financial jeopardy.
I make good use of my credit. I always rotate a reported (significant) balance through my accounts, and even occassionally make a few payments before paying off.
And the result: My ccc's don't take much notice to me using my credit. When I go to shop for credit, then of course I make sure that for a month or two or three, I zero out balances, allow the reports to update and FICO to tweak out (up) before app'ing.
But I don't think it is healthy to have a perpetual high score and perpetual low reported balance if you ever want to actually be able to access any significant portion of your CL's. If you have traditionally had, for example, FICO's ranging from 780 to 800, but then drop to 720 due to a large use of credit lines (not due to financial jeopardy) then you may trigger AA, FR or other actions.
2 months ago for various business inventory and other expenses, I made $90,000 use of CL's of which more than $50,000 reported as balances. I personally think that my creditors seeing that I make regular use, have balances, pay balances and that my FICO has ranges (when they AR soft) going from low 700's to high 700's, that this keeps me in a wider band of acceptable use and pattern recognition that doesn't cause alarm.
DISCLAIMER: I do not spend credit on frivolous items that I have to pay over time. I just exercise substantially in a manner that allows my creditors to understand my capacity to pay and to provide a known level of use that keeps my CL's actually available and not as shadow credit that will evaporate if used.
I do not recommend this, I am merely providing an FYI concept on credit: When you have credit and fail to use it, you may actually have an inability to use it later because of the patterns established.
I REALIZE MANY WILL DISAGREE philosophically or as a matter of their personal financial principle. And I am not attempting to recruit anyone to begin using credit heavily. This information is merely for theoretical discussion, and to provide practical experience to the topic.
IMO 