Trying to Understand

[Anonymous]

Not trying to put anyone down or attack anyone, simply trying to figure stuff out.  I have many credit cards, many inquiries, and many mortgages and never had an issue with anything.  Why do people worry about whether a card reports a balance or not each month?  When I applied for one mortgage, lender asked me about the inquriies, I submitted the required answer, never a problem.  None of this will make a difference for a mortgage no matter when you apply for it.  Got it, the score may be affected by the inquiry, but it is so small, it's negligible.  In 99% of the cases it won't affect an underwriting decision for a mortgage and I imagine the same for a car loan.  If you just use the cards responsibly, pay each month, why does the rest matter?  I have zero real credit card balances, but I am keeping $11k in artificial balances due to balance transfers and making money on the transfer, but I could pay that off anyday.  And, it hasn't affected my ability to get anything....

Next question, why do people think that banks (AMEX, Chase, BofA) etc care about your level of spend each month?  They care about getting repaid.  I have all the cards from all the banks, and I don't think any of them truly care.  Why do people want to put $5k on AMEX, etc.  Does it really matter?  I'm so confused about all this stuff, someone chime me in.  

[Anonymous]

I do agree with a lot you're saying.  Right now, the new accounts hitting along with new inq's seem to have no effect on my score at all.  I did charge about 14k recently and letting it report right now. From paying in full to this.  NO change.  Actually, my score went up 7 points now!  And the simulator now says I will come out of this with a higher score.  I can pay the 14k off too but don't choose to do so right now.  Just playing around to see if I can come out of this with a higher score.  We're actually just about ready to app for a cssh out refi to put a pool in.  I'm not worried a bit about the inq's or new accounts as I have managed them responsibly.  They can see that by my bank accounts. True on the banks.  They just want your money!  But managing your accounts is paying them in full or a good chunk of change every month.  I put the 14k across 3 cards so my ut stays below 30%.  Anything above that will make your score drop.  

[Anonymous]

Congrats on having a healthy credit profile; many people here can't say the same thing, and that's why it all matters. When I was rebuilding I played the utilization game to boost my score, and it worked. I once let one card report a 31% utilization and my scores dropped by an average of 17points; the next month, when I PIFd midcycle my scores whent back up. You reference your mortgage a lot, a mortgage is treated differently from other credit products, especially cards. A lot of people here chase rewards or are rebuilding, in these cases inquiries do matter because too many can mean a denial for a CLI or a new card. I once worked for a big name CCC and those customers that spent more on their cards (and PIFd each month) were treated differently then those who rarely used their cards. Those customers that maintained high balances in relation to their limits were kept on a short leash. So banks do care about how you use their money. Once you've established great credit a lot of these points you mentioned really don't matter, but until then they do for some. 

[Dahlia77]

I'm no expert but you say in your post that you have many credit cards and many mortgages which would suggest that you have a thick file.  From what I have read from different posters, the people with thick files often felt little to no impact with multiple inquiries or new accounts.  If they do feel a ding, it quite quickly bounces back.  However, for those of us with thin files (rebuilders included) the inquiries and the addition of new accounts slices off a lot more points so utilization becomes one of the major things you have control of to try and minimize that decline.

As for usage, I don't have enough cards to be savvy with each of the lenders but I would say that Capital One is a good example of usage being a way to go from a minimal SL to a significantly higher one.  I know I have read numerous times on this board and another that Cap One has even stated on the phone that they would like to see more usage.  The majority of people that have charged their cards up or even used more than their limit by paying several times in a billing cycle are generally the ones that have then had great success with rapidly moving their limits to higher levels.  I don't believe that Cap One is the only lender that subscribes to this idea of wanting to get as much of your business as possible - I'm sure some of the other lenders do also.  In very unversed terms, it gives them a reason to give you a higher limit as they see that you are capable of paying and that what you spend through them per month and your limit are not equal with one another thus the justification to raise it.

One cannot change the percentage of their Fico score that is AAOA nor if they have a baddy reporting still on their credit show perfect payment history.  What they can do is keep their utilization down.  Higher limits make that a more achievable goal for many.  If your interest rate, your credit limit and the cards you can are eligible for are dictated by scores then for many that actually participate in the Fico forums playing the percentage game which is spelled out by Fico itself is key and can make a big difference in their ability to continue building their credit, rescusitate the credit or finally get their score to that place to secure a mortgage.

All that being said, you cannot judge everybody that participates in the use of credit by the forum.  The majority of the public do not take this much time to work on their scores, monitor them or take an active interest in credit.  The people that post here are probably a minute percentage of the US population that has credit.  Most people that I know don't even bother to monitor their credit reports and if they need a credit card they just cold app and use it when it arrives.  Fico members are a different breed that have a real interest in understanding the system and building and protecting their credit.  

[Anonymous]

Well, with a thick file, lots of inquiries, credit cards with long AAoA's and even multiple mortgages; I am not surprised you "haven't had an issue with anything"!

But that isn't the case with a lot of people with thinner files and debt issues in the past. They are still trying to rebuild a good relationship with the CRA's and their CC's.

Secondly, reporting a balance does make a difference in a lot of cases. For the first time this month I let 2 of my cards report a $50 balance and it increased my scores roughly 20 points across each CRA. They like to see you are paying something off.

Thirdly, banks do somewhat care how much you spend. Someone that is spending $50 a month on a card is a lot less likely to receive a CLI than someone who spends $4k a month. And this is what people are trying to do a lot of the time.

I understand where you are coming from though, but a lot of these points do matter, otherwise we wouldn't all be doing it.

[Anonymous]

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@Anonymous wrote:

Next question, why do people think that banks (AMEX, Chase, BofA) etc care about your level of spend each month?  They care about getting repaid.  I have all the cards from all the banks, and I don't think any of them truly care.  Why do people want to put $5k on AMEX, etc.  Does it really matter?  I'm so confused about all this stuff, someone chime me in.  

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They definitely are about your level of spend.  That's where they make their money, thru swipe fees.  If you're not using your card, they aren't making any money.  Yes they care about getting paid but that is just one portion of how they view you as a customer.  If you never use your card or only for little amounts, you are nowhere near as valuable to them as a customer and their responses to such things as CLI requests will take that into consideration.

[Anonymous]

Most people dont worry about whether a card REPORTS a balance. The only people who are really concerned with that are the people who are trying to maximize their score due to having a large purchase coming soon. They are trying to get the best possible rate on the loan they are going for.

A lot of people do worry about CARRYING a balance from month to month due to the high interest charged by credit card companies. There are much better ways to borrow money than off a credit card if you must.

I, for example, never carry a balance on my credit cards while I almost always have a balance reported on my credit cards. There is a big difference there. Most of us dont really care about whether a balance gets reported most of the time. We just care about using the cards to get the most rewards for the money we do spend. If I have to spend money, might as well get some of it back.

Banks do care about your level of spend to some degree. If you spend $10 a month on a card, and I spend $10,000 on the same card, the banks will see us very differently. I would be making the banks way more money than you and they would probably worry less about granting me higher limits than they would you. It is just like hotels or the like. They will treat you way differently if you stay with them say once a year compared to 100 times a year. They want that money!

Most people want a higher credit line so they dont have to worry too much about trying to keep utilization down when they are trying to obtain that large loan. It is MUCH easier to keep a 1% utilization when you have 50k in revolving credit than if you had 300.

Bottom line: We want them high FICOs so we can get them good rates lol

[Anonymous]

Loving this thread in particular.  Heck, maybe if I would devote half the time I spend on here learning, and put that into planning my payments, I wouldn't be riding this dang 700 line for so long! LOL IT IS KILLING ME!!!!!!!!!!!!!!!!!!!!!!