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New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP!)

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lifeafterdeath
New Member

New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP!)

Hi There

 

I am relatively new to America and am trying to build Credit to obtain a mortgage.

 

I have 4 open lines, the oldest being 1.8years, the shortest 4 Months and the average being 9 months (of all 4 cards)

 

Before becoming serious about buying a house I had the cards near Max. (But I have never had a late payment).

 

One card went over the limit and it showed on my statement, it exceeded limit by $54 (this was February 2013)

 

Since becoming dead serious about buying house, I have paid all 3 cards down and am using less than 10% debt on them. The last card I am working on paying down i now have less than 50% debt on it. I should have it down to under 10% in the next month. I continue to make small purchases on them to keep them revolving.

 

Questions:

 

(1) Having exceeded the balance on 1 card in Feb., will this show up on a Credit Report come July / Aug when i apply for a mortgage? Will this be a black mark against me?

(2) Do i need to keep balances of Cards at less than 10% or is the "Magic" number less than 25%?

(3) Since i am new to America (less than 3 years - if that's new?!) - Do i get some sort of leeway since i don't have long credit history.

(4) My 4 cards limits are: $1000 Care Credit, $1000 Bank Credit Card, $4000 Capital One, $500 Home Depot. Total of $6500 with an average of $1625 ($6500 / 4). - Is it true you want to get your average above $2000? Will this help increase my Credit Score? - (this is what MyFree Credit Report tells me, unsure about this site...)

(5) If i buy furniture from a store (Looking at new bed) - Will this help my Credit Score increase?

 

Any replies much appreciated.

 

 

 

Message 1 of 10
9 REPLIES 9
john398
Senior Contributor

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

1) it may show orn your report but will not effect your score, they may ask you about it on manual review

2) less than 10% on one card aall other cards 0

Message 2 of 10
bs6054
Valued Contributor

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

Did you have an American Express card in your previous country?  If so, you can transfer its history which would help.

Message 3 of 10
webhopper
Moderator Emeritus

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

Questions:

 

(1) Having exceeded the balance on 1 card in Feb., will this show up on a Credit Report come July / Aug when i apply for a mortgage? Will this be a black mark against me?

(2) Do i need to keep balances of Cards at less than 10% or is the "Magic" number less than 25%?

(3) Since i am new to America (less than 3 years - if that's new?!) - Do i get some sort of leeway since i don't have long credit history.

(4) My 4 cards limits are: $1000 Care Credit, $1000 Bank Credit Card, $4000 Capital One, $500 Home Depot. Total of $6500 with an average of $1625 ($6500 / 4). - Is it true you want to get your average above $2000? Will this help increase my Credit Score? - (this is what MyFree Credit Report tells me, unsure about this site...)

(5) If i buy furniture from a store (Looking at new bed) - Will this help my Credit Score increase?

 

Any replies much appreciated.

 

 

 


I will attempt to answer your questions:

1) This will not affect your score long term.

2.)  Keep all balances at $0, except for 1, which is at less than 10% of the total credit limit for that card.

3) There is no leeway.  The scores are meant to indicate risk.  Short history of credit in the US = higher risk of default

4) Do not listen to the advice from that website, that is a FAKO score site.  Do not apply for any new cards.

5) I repeat, do not apply for any new accounts, furniture, credit card, or otherwise.  If you buy a bed, pay cash.  If you pay cash it will not affect your credit.  Its a better idea to save your money for the house and continue to sleep wherever it is that you've been sleeping.    If you buy a bed now, you may not like the style in your new house.  Just wait.

FICO 9:
Filed Chapter 13 on 6/1/2017 after job loss. Discharged 6/1/2022.

Goal: Gardening!


Message 4 of 10
lifeafterdeath
New Member

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

Thank you all for such speedy replies, what a great site! Massivly appreciated.

 

Quick question, you say "2.)  Keep all balances at $0, except for 1, which is at less than 10% of the total credit limit for that card."

 

To confirm, "Keeping Balance at $0" means i continue to use the card each month, but just make sure that i Pay it off each time? Do you pay it back to $0 before the "Statement Date? Or before the "Due Date?" - They fall at different times of the month.

Message 5 of 10
bs6054
Valued Contributor

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP


@lifeafterdeath wrote:

Thank you all for such speedy replies, what a great site! Massivly appreciated.

 

Quick question, you say "2.)  Keep all balances at $0, except for 1, which is at less than 10% of the total credit limit for that card."

 

To confirm, "Keeping Balance at $0" means i continue to use the card each month, but just make sure that i Pay it off each time? Do you pay it back to $0 before the "Statement Date? Or before the "Due Date?" - They fall at different times of the month.


It means paying it off before the statement date, i.e. before the statement is produced.   Once the statement cuts, the balance is reported to the credit agencies.  Keeping this figure 0 (on all but one card) maximizes the credit score.   This is only needed when you plan to apply for something, if there is a big balance one month your credit score goes down, but if it is small the next month it bounces right back.  No history is kept, unlike say late payments.

Message 6 of 10
bs6054
Valued Contributor

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP


@bs6054 wrote:

@lifeafterdeath wrote:

Thank you all for such speedy replies, what a great site! Massivly appreciated.

 

Quick question, you say "2.)  Keep all balances at $0, except for 1, which is at less than 10% of the total credit limit for that card."

 

To confirm, "Keeping Balance at $0" means i continue to use the card each month, but just make sure that i Pay it off each time? Do you pay it back to $0 before the "Statement Date? Or before the "Due Date?" - They fall at different times of the month.


It means paying it off before the statement date, i.e. before the statement is produced.   Once the statement cuts, the balance is reported to the credit agencies.  Keeping this figure 0 (on all but one card) maximizes the credit score.   This is only needed when you plan to apply for something, if there is a big balance one month your credit score goes down, but if it is small the next month it bounces right back.  No history is kept, unlike say late payments.


And the only wrinkle is that a few issuers (such as US Bank for example) report balances to the CRA's mid-cycle, so the statement balance isn't the important one.

Only way to deal with this is to check on your credit report to see the balance that was reported and work out roughly when in the month that was your balance, and from then on pay down near that date.

 

To be really sure, some pay after every purchase, but that is way too much work for many, and some issuers restrict payments per month through their websites.

Message 7 of 10
lifeafterdeath
New Member

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

Thank you so much bs6054 for the above information. This is all so new to me and i really want to do everything i can to bring my CS up. I never new about the trick of having 2 cards at $0 and one with less than 10% - Thank you to all who contributed to this post.

Message 8 of 10
lifeafterdeath
New Member

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP

I guess there is just one last question. I understand paying it back to $0 before statement, can you confirm.

(1) Will just One purchase on the card suffice during the billing cycle? Or are you meant to be using it regularly / weekly and paying back to $0 - Or do I only need one purchase?

(2) When I am using it, do I want to keep my purchases under the 10% and pay that back down to $0 - or is it good to exceed 10%, say use 15% and then pay the 15% back straight away?

Message 9 of 10
bs6054
Valued Contributor

Re: New to America, Exceeded Credit Limit & Trying to Build Credit Score to Buy a House... (HELP


@lifeafterdeath wrote:

I guess there is just one last question. I understand paying it back to $0 before statement, can you confirm.

(1) Will just One purchase on the card suffice during the billing cycle? Or are you meant to be using it regularly / weekly and paying back to $0 - Or do I only need one purchase?

(2) When I am using it, do I want to keep my purchases under the 10% and pay that back down to $0 - or is it good to exceed 10%, say use 15% and then pay the 15% back straight away?


1) If you are only concerned (as I think you are) with credit score, all that matters is the balance that is reported to the bureaus.   So it should just be 0 whenever it reports, usually at statement closing date.  So from this viewpoint, it doesn't matter if you didn't use it at all, used it once, or used it every hour.  

 

(Remember that one card should show a positive balance to maximize score, balance on one, 0 on the others).

 

2) Again for score it doesn't matter.  Utilization is calculated at report time, so your balance then over credit limit, regardless of what happened that month.  However, your report will sometimes note your highest ever balance, which some lenders will look at.

 

But, you may also be concerned about the card issuer.   If you go too high, even during the month, some issuers might get nervous (on the flip side, it might encourage them to think about increasing your credit limit, but don't rely on this) 

 

And on 1, issuers are going to care more about total spend (and type of spend, if you are only spending in reward categories you might be unprofitable) rather than how often you are using the card during the month.  Some lenders will close a card if it isn't used at all for some months.

Message 10 of 10
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