topic Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard in Credit Cards

Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Sun, 15 Jul 2007 01:39:07 GMT

Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

I have taken my own experiences, as well as those of others on these boards, and come up with this primer on how to turn credit cards from interest-charging oppressors into your FICO-improving slaves.

1) "Don't apply for credit unless you really need it" is a canard, in almost all cases. This is especially true if you have damaged credit. If you don't have a credit card, you need one. If you only have a couple, you need another one. Why? We all know that getting negative information removed from a credit file is difficult if the information is correct. We also know paying off old debts does little if anything to improve your credit rating. The only lever you have to pull to improve damaged credit is to dilute bad credit history and tradelines with good credit history and tradelines. A credit card is the easiest tradeline to get and manipulate to your advantage.

The only time I would hew to the "don't apply for credit" ideology is if my credit score is already good or excellent, I have several positive TLs already, and I'm about to apply for a mortgage. Yes, in that case, "if it ain't broke, don't fix it." Otherwise, you could use more good history.

2) Secured cards do help raise your FICO, and are worth having if that's all you can get. Remember from Point 1 that the only way you can improve bad credit is to dilute it with good credit. From FICO's perspective, a bill paid on time and an account in good standing counts whether secured or unsecured. All FICO cares about is you showing over time you can meet your obligations and pay bills. It doesn't care if you had to leave a deposit with the CC company to get the card. Waiting until your FICO inches up enough to get an unsecured card is a big mistake.

As a corollary to this, low credit-limit cards help too. Again, they are accounts in good standing, and are reported as such.

3) Credit line increases do happen on unsecured cards, and graduations on secured cards. But they may take time. This is especially true if you have a low FICO and/or baddies in the past 30 months or so on your CR. Baddies can make a CC company especially reluctant to grant graduation or CLIs. Look at it from their perspective: all they can see is that you stiffed the power company in 2006, and the department store in 2005, and you have no history of paying on time. But after a year or so of on-time payments, a CC company become more willing to overlook your sins elsewhere and give you a break. Don't think you are "wasting your time" with a secured card that takes a long time to graduate. The card is doing its job, counting as a positive TL and helping improve your credit score.

4) Here's how to manage CCs: Keep your balance above zero, but less than 10% of your credit limit. There. That's all there is to it. There's no insider's magic formula. No secret handshake. FICO likes to see you living well within your means, but managing and not sockdrawering your credit. Having a credit card in your sockdrawer zeroed out for a year doesn't show you can manage credit, and won't help your score or improve your standing with the CC company. Using the card but keeping low balances tells FICO you can manage credit superbly, and gets the CC company to thinking that a CLI might draw you out and encourage you to get daring. You can do this even on low-limit cards...just charge small items.

5) Don't get any more baddies, anywhere. Whether your CC company practices universal default (i.e., jacking up your interest rates if you get a ding elsewhere on your credit report) or not, you can count on any default anyplace else being used against you somehow. Certainly a 30-day late or collection elsewhere will significantly delay your graduation or CLI.

6) Ask for a CLI/graduation every six months. If you are denied, call into Customer Care, escalate to supervisors, and demand a review. Sometimes a manual review will get you what you want.

7) Closing a credit card is almost never a good idea. A significant part of FICO is the length of credit history, and the number of positive tradelines. While closing a credit card account will not affect the length of your credit history (the account will remain on your CR), this act will reduce the number of open positive TLs by one. If an annual fee is bugging you, negotiate to have it lowered. A good rule of thumb is that if your FICO has risen 30 points or more, and you have not accumulated any more baddies in the year since you last paid the fee, you are in a position to negotiate a lower fee and better terms.

8) Your best protection against ratejacking is avoiding baddies and keeping a low balance. As a corollary, charging up near your card's limit is a great way to attract a rate-jacking. Why? Credit card company psychology. Let's consider two customers for a $1000 credit card. Customer A has a balance that bounces from $600 to $990 or so, and has never PIF. Customer B has never had a balance over $100 or so, and pretty consistently stays between $5 and $25. B has three PIFs in the past year. Who are you going to ratejack? Obviously Customer A, who has demonstrated he or she has to have the credit card, can't get around to paying even close to his balance, and keeps revolving a high balance. Customer A apparently can't pay his debt down, so he's a captive audience. You're not going to ratejack Customer B now, are you, because you know full well he could PIF whenever he pleases and tell you what bodily orifice to stick your card into. Right? So be a Customer B.

Even if your credit is less than sterling, there are cards that will approve you. Check out this thread.
http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=21561

Message Edited by TheNewWorldMan on 07-14-2007 06:37 PM

Message Edited by TheNewWorldMan on 07-14-2007 06:39 PM

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Thu, 17 May 2007 01:48:12 GMT

Good solid information NewWorldMan. Very sage advice..

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Thu, 17 May 2007 02:01:39 GMT

A note to item 7, if you want to close a card for some reason, you can frequently get a new card of a different type and put the old card's limit on it, or if you have multiple cards from the same issuer, you can shove the limit of the card you're closing onto one of the others. I had a hotel card which I closed because they only waived the fee for the first year, and I stupidly just closed it instead of shoving the limit onto another card. So when I got this super deal on a new card from the same issuer, I had wasted some credit limit that I could have advantageously added to the new card.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Tuscani — Thu, 17 May 2007 11:18:36 GMT

Good info!

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Fri, 18 May 2007 06:26:45 GMT

Good post NWM you are still blunt and to the point.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

MercyMe — Sat, 19 May 2007 02:41:25 GMT

O ye of such profound, hardearned, wisdom, tell me, does my daughter's credit card that I am an authorized user on, affect my credit? It shows up on my CRs. Would it hurt to dispute this as not mine? She put me on it so that I could sign her name to the charges made were she to be sedated, while undergoing a surgical procedure (wisdom teeth) and unable to sign, herself, which turned out to be the case. Should I have it deleted from my file, or keep it?

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Sat, 19 May 2007 04:21:16 GMT

Are you finished with needing to use it? The card and the attributes associated with it (age, whether or not there are any lates, credit limit, and balance) show up on your file as if the card were yours. If it has a low balance and a high credit limit, and a reasonable age, it probably helps you, if it has late, it certainly hurts you, and if it has a balance more than about 30-50% of the limit, it probably hurts you. There's no need to dispute the card, just get your daughter to take you off of it. Disputing it will not actually work, I think, because the card is in fact "yours", because you are a real authorized user. If your credit score is already pretty high, just get your daughter to take it off, then you don't have to worry about it.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Tuscani — Sat, 19 May 2007 13:28:48 GMT

MikeToreno wrote:
Are you finished with needing to use it? The card and the attributes associated with it (age, whether or not there are any lates, credit limit, and balance) show up on your file as if the card were yours. If it has a low balance and a high credit limit, and a reasonable age, it probably helps you, if it has late, it certainly hurts you, and if it has a balance more than about 30-50% of the limit, it probably hurts you. There's no need to dispute the card, just get your daughter to take you off of it. Disputing it will not actually work, I think, because the card is in fact "yours", because you are a real authorized user. If your credit score is already pretty high, just get your daughter to take it off, then you don't have to worry about it.

Disputing should work because the account is NOT owned by the AU, and the AU has no reponsibilty for it. But the preferred method is to ask the CCC to simply remove you as an AU.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

MidnightVoice — Sat, 19 May 2007 20:52:43 GMT

One of my green bits on my TU report (things that good)

You've shown recent use of credit cards.
Your FICO score evaluates your mix of credit cards, installment loans and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders. You helped your FICO score by showing recent use of a credit card.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Sat, 19 May 2007 23:27:05 GMT

MidnightVoice wrote:
One of my green bits on my TU report (things that good)

You've shown recent use of credit cards.
Your FICO score evaluates your mix of credit cards, installment loans and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders. You helped your FICO score by showing recent use of a credit card.

This just goes to show why you shouldn't sockdrawer a CC. Keep a miniscule balance on it, yes. I have a CapOne card with a $2 balance now, and an Orchard with $9. My BofA balance is down to $29. My motto is, "y'all pretend to give me a real credit limit, and I'll pretend to use your card."

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

SoulSmilen — Sat, 19 May 2007 23:40:30 GMT

TheNewWorldMan wrote:
This just goes to show why you shouldn't sockdrawer a CC. Keep a miniscule balance on it, yes. I have a CapOne card with a $2 balance now, and an Orchard with $9. My BofA balance is down to $29. My motto is, "y'all pretend to give me a real credit limit, and I'll pretend to use your card."

LOLOL.. I love it. However, you now owe me a new monitor since I just spewed Diet Coke all over mine.

On a side note... congratulations on your credit score improvement! It's nice to see your bluntness being voiced on the positive side of things now!!

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

MM1234 — Sun, 20 May 2007 14:54:58 GMT

Excellent Post!! Great detail.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Tue, 22 May 2007 05:18:23 GMT

I just snagged myself a Household card with NO annual fee, $750 CL.

Six months ago I was getting "offers" for a $300 CL with $200 in up-front fees and $8 a month in monthly maintenance fees.

It works, folks...you can get back in the saddle again. Just treat your credit cards like the slaves they are, and NEVER use them to revolve a balance for credit to spend money you don't have.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

SoulSmilen — Tue, 22 May 2007 05:52:19 GMT

Congrats!!!!

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Tue, 22 May 2007 20:46:41 GMT

TheNewWorldMan wrote:

MidnightVoice wrote:
One of my green bits on my TU report (things that good)

You've shown recent use of credit cards.
Your FICO score evaluates your mix of credit cards, installment loans and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders. You helped your FICO score by showing recent use of a credit card.

This just goes to show why you shouldn't sockdrawer a CC. Keep a miniscule balance on it, yes. I have a CapOne card with a $2 balance now, and an Orchard with $9. My BofA balance is down to $29. My motto is, "y'all pretend to give me a real credit limit, and I'll pretend to use your card."

You have too many credit accounts with balances.

Number of your accounts carrying a balance
8 accountsFICO High Achievers [?] have an average of 3 credit accounts carrying a balance.

Your FICO score considers the number of accounts you have with balances. For credit cards, even if you pay them off in full each month, your credit report may still show a balance on those cards. The total balance on your last statement is generally the amount that is shown on your credit report.
What to do about this: You should consider reducing the number of your accounts that carry a balance and keeping your balances low.

So this is like a compound question.

I keep balanced on these cards because I have 1 bill going to each card. I am doing this because I am afraid of them being closed due to inactivity.

What should I do?

Should I drop a bunch of my newer credit cards? I opened like 3 this year 1 is a discover card with a 3k credit line and the other 2 are $500 each, opened like 1-3 months ago each

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

MidnightVoice — Tue, 22 May 2007 21:03:47 GMT

Personally I would lock away a few with zero balances and use the others, keeping utilization very low. Every 5 months unlock the unused cards, zero out the used cards and lock them away

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Tue, 22 May 2007 21:23:21 GMT

ah the ol rotation

well I can zero out any of them, thats no problem

like i said I only use them for my monthly bills

Credit expert -me

Credit expert -the woman

DSL

Cellphone

stuff I buy during the month

I guess what I will do is convert everything to the 3k card and then rotate it like u said

1 other thing I was thinking was, I have money so i was thinking about sending 2 months worth of payments to each card so that each month I am paying the next month's bill, making the balance go negative and when the bill gets charged to the card it it just moves closer back to 0

so each card will have a teetering balance of -20 and 0

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

MidnightVoice — Tue, 22 May 2007 22:13:20 GMT

Some card or other should have a positive balance, very low, on the reporting date. Looks better to the CRA

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Anonymous — Wed, 23 May 2007 00:53:51 GMT

I need some clarification here.

My credit scores were all over 800. I have only a mortgage with a balance. I have an Amex which I charge everything to and pay off every month. My Amex reports the balance on the bill regardless of whether I pay it in full or not... I always pay it off in full every month. Over the past year I started paying in advance so my balances would be small (under $100). My credit score improved when I started doing this.

Also, I have had a mastercard for 15 years which I have hardly used over the past few years. I read on the forum that it's better to have some small balances so I charged gas for around $30 last month on it. My Transunion score dropped 14 points because I had another card with a balance. Nothing has changed on my credit over the past few years. I have one modest mortgage and use my Amex. No late payments, no car loan, no student loans, no other credit cards, no collections, no other loans.... nothing.

Can someone please explain why everyone keeps saying it's better to have a small balance on your credit cards.... yet when I did it my score dropped from 816 to 796?

When I called TU they basically told me I was being ridiculous because either way my score was good. Now I don't know if I should keep using the other cards or put them away again.

Re: Veni, Vidi, Vinci, Visa or How to Master Your MasterCard

Tuscani — Wed, 23 May 2007 11:05:09 GMT

heatherjo811 wrote:
I need some clarification here.

My credit scores were all over 800. I have only a mortgage with a balance. I have an Amex which I charge everything to and pay off every month. My Amex reports the balance on the bill regardless of whether I pay it in full or not... I always pay it off in full every month. Over the past year I started paying in advance so my balances would be small (under $100). My credit score improved when I started doing this.

Also, I have had a mastercard for 15 years which I have hardly used over the past few years. I read on the forum that it's better to have some small balances so I charged gas for around $30 last month on it. My Transunion score dropped 14 points because I had another card with a balance. Nothing has changed on my credit over the past few years. I have one modest mortgage and use my Amex. No late payments, no car loan, no student loans, no other credit cards, no collections, no other loans.... nothing.

Can someone please explain why everyone keeps saying it's better to have a small balance on your credit cards.... yet when I did it my score dropped from 816 to 796?

When I called TU they basically told me I was being ridiculous because either way my score was good. Now I don't know if I should keep using the other cards or put them away again.

What is the limit on your Mastercard? Is the limit being reported? What kind of card is it?

And honestly.. there is no difference between 796 and 816.