Score updates coming quick

[Stryder]

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@Anonymous wrote:

PS.  I saw that part of your plan is to try to increase your total credit limit.  You mention that it is 16k now but you want it to be higher.

That's a fine goal.  Personally my advice is to make it a very secondary goal.  I am sure you have heard that over time you can periodically solicit soft-pull based CLIs.  And you have several cards so it will certainly go up over time.

But I'd also mislead you if I told you that the bigger CL would help your score.  If it does help a person's score, that necessarily means that he is unable to pay off his cards.  And if that's so, then that becomes the (very serious) problem to work on, not one's CL.  Yours is fine right now and you should be able to easily have a total utilization of < 29 % without even trying, and of course if you need a top score you can get it in a heartbeat by paying all cards to $0 except one.

PPS.  If you ever do get a charge card, make sure that you do not use it (or an AU card) as the "one" card that reports a balance (if you are straining for a top score).  FICO may ignore it and then it would look like all your cards are at $0.

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Here is where I am at on my plan... I am happy with my rewards cards and the mix/diversity. I do not need any more rewards because I don't see any use for having cards in the sockdrdrawer, i have all that I can feed now. I do however want a good BT card or two ...I have mentioned SDFCU because of their 7.24% rate, but I don't know how much of a cl I can get with them. I am also interested in this NFCU Platinum because it also has a good rate at 8.24% and could be an awesome SL.

With this setup I can buy with my reward cards and if I want to carry a balance, I can bt to these cards...I may get both and then I will be set and go the garden for a year or two and let things grow. The PRG card was exciting but it doesn't fit in with me...I have the CSP for mileage, the Amex and QS for rotation, and the Sync card for refridgerators and furniture where I can carry with zero for for 36mo. I also believe I can get very good car rates between these two CU's

Let me know if this is a decent plan or if there are different ways to approach what I am doing...

Thanks again for your advice CGiD!

[805orbust]

Good advice Credit Guy. It's a great story Stryker. Nice to read this kind of thing.

[Anonymous]

Your plans sound fine.  What I think is most important is that they are your plans -- you are carefully thinking things through and making a plan.  That's better than most of us do (me included).

I don't know much about BT cards.  I seem to get 0% offers (unsure whether there are BT fees) about half of the time I get a card.  I never use them, since I have a lot of cash in the bank.  I wonder whether it makes sense to wait on the BT issue until you actually need it -- and then when you do, apply for whatever cards are out there that are currently running a 12 or 18 month 0% promotion.  (As I say, I seem to get these even if I am solely looking for a huge signup bonus.) 

Other folks can guide you better through the whole BT and carrying a balance issue, since as I say I never use that aspect of CCs.  A very quick question, however: do you plan to buy a house or refinance an existing mortgage in the next few years?

[Stryder]

however: do you plan to buy a house or refinance an existing mortgage in the next few years?

Yes....

[Anonymous]

In that event, you may wish to move away from the pattern of occasionally carrying balances, and moving instead toward always paying your cards in full.

For many many years there was never any downside to carrying balances (aside from the interest you might have to pay) since creditors and future lenders had no way to see if you did that.  A person preparing for any important credit pull (like a mortgage) could simply pay off his credit cards a month before and it would look like you had always had mostly zero balances and maybe one small balance.

Until, that is, a fairly new development, where potential lenders began to be able to see if you have carried balances in the last 24 months and if so how much and how often and whether you only paid the minimum payment.  Furthermore (and this started only a month or two ago) Fannie Mae has required lenders to incorporate this into their decision making.  People who occasionally carry balances are called revolvers and are (as a group of people) far riskier than those who always pay their cards in full.

Here's a recent thread where this was discussed:

http://ficoforums.myfico.com/t5/Credit-in-the-News/Equifax-going-to-report-balance-payment-amount-hi...

[Stryder]

That is good to know, but I don't plan on carrying a balance, the BT cards are for after we get a mortgage and for doing upgrades and such..also emergencies. The only balance I am carrying now is what's left on my SYNC card ($850), once that is paid off, I will have zero balance on all cards...I pif them all and i will rotate around each to leave the one balance on.

That is great info in the link, and on the links in the thread. I think it will encourage people to have better credit card habits.

My first card after my troubles in 2009 was my BoA. It started out as a secured card for $500. I ask the Gentleman helping me set the card up, how I should pay on it. I had always bought clothes, fishing rods, whatever and then paid minimum Payments. He said, no, they don't like that, they like for you to keep it around 50% paid off. I asked if it wouldn't be better to pay it way down, he told me they didn't like that either. I know now that answer is so they get the interest. He could care less about whats best for me.   I paid it like that up until the year thinking I was doing the right thing

[Stryder]

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@Anonymous wrote:

In that event, you may wish to move away from the pattern of occasionally carrying balances, and moving instead toward always paying your cards in full.

For many many years there was never any downside to carrying balances (aside from the interest you might have to pay) since creditors and future lenders had no way to see if you did that.  A person preparing for any important credit pull (like a mortgage) could simply pay off his credit cards a month before and it would look like you had always had mostly zero balances and maybe one small balance.

Until, that is, a fairly new development, where potential lenders began to be able to see if you have carried balances in the last 24 months and if so how much and how often and whether you only paid the minimum payment.  Furthermore (and this started only a month or two ago) Fannie Mae has required lenders to incorporate this into their decision making.  People who occasionally carry balances are called revolvers and are (as a group of people) far riskier than those who always pay their cards in full.

Here's a recent thread where this was discussed:

http://ficoforums.myfico.com/t5/Credit-in-the-News/Equifax-going-to-report-balance-payment-amount-history-Is-this/td-p/4758761

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OK, I have read most everything on your link and I am confused on the actions of a Transactor. You recommend to leave a balance to got to statement, then pif a week later. I would think it would be what we do now, by not letting anything report. EQ records would show transctions were made on the account and then could see that it was pif'ed for statement,  which seems like good behavior. What am I missing? How is your recomendation good behavior?

[Anonymous]

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@Stryder wrote:

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OK, I have read most everything on your link and I am confused on the actions of a Transactor. You recommend to leave a balance to got to statement, then pif a week later. I would think it would be what we do now, by not letting anything report. EQ records would show transctions were made on the account and then could see that it was pif'ed for statement,  which seems like good behavior. What am I missing? How is your recomendation good behavior?

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I have read the section I have highlighted in blue a few times, but I just can't make out what you are trying to say.  Would you mind giving it another shot?

[Stryder]

I'm sorry...I was leaving work and I was trying to post in a hurry. My confusion lies in the fact the if you don't pif, and let a balance roll...how does that make it look like you aren't a revolver that leaves balances? When you are leaving balances. Experian is saying they can tell the transactions in your account, and how you pay, then what is the purpose of leaving a balance?

I am just trying to understand, everyone agrees with you, so I know it is my confusion, but I think it's an important detail I want to understand.

Thanks Credit Guy...

[Anonymous]

I am delighted to report that the world does not agree with me about everything.  Thank God!  :-)

It sounds like there are some concepts and terminology we should get cleared up, and that may solve some of your confusion.  In your last post you wrote:

"My confusion lies in the fact the if you don't pif, and let a balance roll...how does that make it look like you aren't a revolver that leaves balances?"

It sounds like you think that PIF (Pay In Full) means the same thing as PTZ (Pay To Zero).  The latter is where a person makes sure that a zero balance reports for that month by paying the card down to $0 before the statement is generated.

PIF stands for Pay In Full, which is itself shorthand for Pay [the "amount owed" that you see at the top of your statement] In Full.  To PIF is to pay that amount in full -- which you do not of course have to do with a credit card.  You could pay less than the full amount, and carry the remainder onto the next statement.

The key idea is that PIF-ing vs. Carrying A Balance are two contrasting ways of dealing with the statement after it has printed with a positive balance.  If the statement has a $0 balance then there is no amount to pay, either in full or in part.

So when I suggest that a simple thing to do is to use your cards as naturally feels right (e.g. use your Amex Blue Cash for groceries, etc.), allow them to produce statements with an Amount Owed, and then pay that amount in full in the couple weeks following the statement date -- that's actually what PIF means.  That's acturally the normal, straightforward way to use your cards.  It's actually PTZ that requires a lot more work and attention.

As you saw, I think PTZ has an important place in the current scheme of things as well.  It's just that you don't need to be constantly paying all your cards down to zero except one every single month.  It's a lot easier (in my view and in the view of some other people) to just use them and PIF, not worrying most months how many zero balances you have.  Then, right before some major huge FICO event (like getting mortgage pre-approval, or whatever) you can do the PTZ to squeeze out some extra FICO scoring points.