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A few questions!

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Anonymous
Not applicable

A few questions!

Hello everyone! I'm fairly new here, decided to make an account today to ask you guys some questions I've had...

 

So as of right now I'm at a 730-740 Credit score and I'm only 18, (I turn 19 in about a week). I haven't been using my parents for credit with them making me an authorized user, in fact their credit is kinda poor because of past events.

 

 

So I'm here because I would like to raise my score even higher! And get more benefits out of having a credit card and just to learn the vast knowledge you all retain.

 

 

Some of my most burning questions are... 

 

1. I only have 1 credit card currently, it's the Discover it card, so far I've loved it and have had no problems or complaints about this card, my main question is, is should I be looking for another card? I know it's good to have multiple cards because you will have a higher utilization and therefor have higher credit by staying under the 9% while spending a lot (if you do). But as of right now I don't have that many bills, I don't pay everything with my credit card either, so I don't know if it would be wise to get another card as of right now if I don't technically need one.

 

2. This comes to my second question where I was wondering, If I applied for a card, and even if I got accepted would I still get a hard inquiry? I currently have 3 hard inquires on my account that still have 16-18 months left and do not want another one... So I would need to confirm this before ever getting a 2nd card. 

 

3. My third and final question is, and let me know if this isn't allowed on this forum... I glanced through the rules and didn't find anything against talking about churning? I've done a lot of research into it and I'm very interested. I plan on once I have more bills/move out and am more financially independent to be making all my future cards that I apply for my churning cards... I would lose a little of credit in order to make money and earn points and I would also maybe even get a little credit from having so many accounts open for churning until I close some of them to rinse and repeat. I guess this isn't really a question more than it is a statement that I'd like to get your guys' a opinion on... Thanks.

 

 

My current stats as stated above earlier are:

 

Credit Score: 730-740 (Different apps tell me different scores)

 

Credit cards: 1 (Discover it)

 

Credit Limit: $1200

 

Total Accounts: 2 (Car Loan and Discover Card)

 

Payment History: 100%

 

AAOA: Only 7 Months.

 

Hard Inquiries: 3 (2 from discover, 1 from Amex)

Message 1 of 10
9 REPLIES 9
Anonymous
Not applicable

Re: A few questions!

Welcome to the forums!  My comments in blue below.

 


@Anonymous wrote:

Hello everyone! I'm fairly new here, decided to make an account today to ask you guys some questions I've had...

 

So as of right now I'm at a 730-740 Credit score and I'm only 18, (I turn 19 in about a week). I haven't been using my parents for credit with them making me an authorized user, in fact their credit is kinda poor because of past events.

 

So I'm here because I would like to raise my score even higher! And get more benefits out of having a credit card and just to learn the vast knowledge you all retain.

 

 

Some of my most burning questions are... 

 

1. I only have 1 credit card currently, it's the Discover it card, so far I've loved it and have had no problems or complaints about this card, my main question is, is should I be looking for another card? I know it's good to have multiple cards because you will have a higher utilization and therefor have higher credit by staying under the 9% while spending a lot (if you do).

 

I think what you mean is that with multiple cards you will have a higher total credit limit, and therefore will have a lower utilization.

 

But as of right now I don't have that many bills, I don't pay everything with my credit card either, so I don't know if it would be wise to get another card as of right now if I don't technically need one.

 

Awesome insight on your part, for several reasons.  (1)  You are correctly in touch with the crucial truth that your spending is low and that is good.  Low spending is more important than the best credit score in the world, because it means you are saving money. (2) You are correctly realizing that even with a fairly low credit limit it is very easy for anyone to have a low utilization.  That is true.  Actually with one card at a $500 credit limit you could spend $2000 per month and still have a 2% utilization.

 

The scoring advantage associated with having multiple cards has less to do with utilization and more to do with the fact that FICO likes it when you have (a) at least one card showing a positive balance but (b) most of your cards showing a $0 balance.  This is a scoring factor different from utilization.  If you think about that carefully you'll realize that there is no way to meet both (a) and (b) without at least three cards.

 

There are other advantages to having multiple cards.  One of them is that multiple cards means multiple accounts.  FICO (and Vantage) like it when you have several accounts.  This has to do with something called profile thickness.

 

2. This comes to my second question where I was wondering, If I applied for a card, and even if I got accepted would I still get a hard inquiry? I currently have 3 hard inquires on my account that still have 16-18 months left and do not want another one... So I would need to confirm this before ever getting a 2nd card. 

 

Yes.  Every time you apply for a card that results in a hard inquiry, even if you were "pre-approved" already for it.

 

3. My third and final question is, and let me know if this isn't allowed on this forum... I glanced through the rules and didn't find anything against talking about churning? I've done a lot of research into it and I'm very interested. I plan on once I have more bills/move out and am more financially independent to be making all my future cards that I apply for my churning cards... I would lose a little of credit in order to make money and earn points and I would also maybe even get a little credit from having so many accounts open for churning until I close some of them to rinse and repeat. I guess this isn't really a question more than it is a statement that I'd like to get your guys' a opinion on... Thanks.

 

Churners are a subset of CC bonus chasers.  You can open cards for the bonuses without being a churner, which involves a more hard-core approach.  Gradually opening 2, 3 or 4 cards per year, and meeting the minimum spend on each is just CC bonus chasing.  It can be esoecially lucrative when it is paired with savings/checking account bonus chasing, not least because the new card can sometimes be used to fund the bank account, and thus meet the minimum spend requirement. 

 

Bear in mind that even if you open a card with an annual fee (and there are many no-annual-fee cards with great signup bonsues) it is usually possible to downgrade that card in a year to a no annual fee card, so closing it is often unnecessary.

 

 

My current stats as stated above earlier are:

 

Credit Score: 730-740 (Different apps tell me different scores)

 

Credit cards: 1 (Discover it)

 

Credit Limit: $1200

 

Total Accounts: 2 (Car Loan and Discover Card)

 

Payment History: 100%

 

AAOA: Only 7 Months.

 

Hard Inquiries: 3 (2 from discover, 1 from Amex)


Final note: if you have no open installment loans, the following technique would help your score a good deal, and get you one extra account into the bargain, all with no hard pull:

 

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/td-p/4506756/highlight/false

Message 2 of 10
Anonymous
Not applicable

Re: A few questions!

Hey! Thanks for the reply. I read what you linked and it sounds promising, just a few questions.

 

You said a lot of people reported that their score went up 28 - 33 points? Would that still apply to me if I'm already fairly high sitting at 730-740?

 

Also, I don't know what an installment loan is, but I have a car loan currently, would that mess anything up? You said in the thread something about other loans but never really addressed car loans.

 

 

 

Also another question is, is there anyway to get my hard inquires that I have now taken away? Or do I have to wait the full 24 months? And I've heard that it's -5 credit per hard inquiry? Is that true? 

 

 

One last question is, if I were to churn in say 5 years, when I hope to have more expensives and be independent and all my current inquries will be gone. Do churners just have 5-15 hard inquires at a time??? I know the 5/24 rule and all of that but if you apply and cancel and churn on a bunch of cards you'll still have the inquries for 24 months correct? And most churners churn a lot in 2 years? So I'm little confused on that part? Because wouldn't you be losing a decent amount of credit? I know churners can afford to lose credit and inquires are low impact but still?

 

Does having multiple accounts (credit thinkness) help your credit loss for all the hard inquires you would get from opening so many credit cards? 

Message 3 of 10
Anonymous
Not applicable

Re: A few questions!

We have a number of reports of people getting a 30 point ponus when they were at a FICO of 820.  I.e. 820 ---> 850.

 

I saw that you had a car loan but couldn't be sure whether it was open or not.  Car loans are installment loans.  So are student loans, mortgages, personal loans, etc.

 

Hence you do have an open installment account (aka a loan) and the SS loan technique won't help you.  It makes a lot of sense to implement the technque a couple months before you pay the car off, however, so that you can ensure that you continue to have an open installment loan that is mostly paid off.

 

Yes, most churners have a lot of inquiries, though bear in mind that a single credit card inquiry usually appears on only one bureau.  Thus, if you apply for 12 credit cards in a year, that could result in (say) 5 inquiries at EX, 4 at EQ, and 3 at TU.  (I picked the inquiries at each bureau at random.)  Five inquiries is not huge and twelve (!) cards per year is a lot!  After three years that's 36 new credit cards!

 

Also, remember that although it takes 24 months for any inquiry to fall off your reports, FICO ignores it after 12 months.

Message 4 of 10
Anonymous
Not applicable

Re: A few questions!

Can you confirm that each inquiry is -5 credit score or is that wrong info I've received?

 

Also I have all the money to pay off my car loan right now, which is $6800 remaining, would it lower my credit if I payed it off in full right now? And if so why?

Message 5 of 10
SouthJamaica
Mega Contributor

Re: A few questions!


@Anonymous wrote:

Hello everyone! I'm fairly new here, decided to make an account today to ask you guys some questions I've had...

 

So as of right now I'm at a 730-740 Credit score and I'm only 18, (I turn 19 in about a week). I haven't been using my parents for credit with them making me an authorized user, in fact their credit is kinda poor because of past events.

 

 

So I'm here because I would like to raise my score even higher! And get more benefits out of having a credit card and just to learn the vast knowledge you all retain.

 

 

Some of my most burning questions are... 

 

1. I only have 1 credit card currently, it's the Discover it card, so far I've loved it and have had no problems or complaints about this card, my main question is, is should I be looking for another card? I know it's good to have multiple cards because you will have a higher utilization and therefor have higher credit by staying under the 9% while spending a lot (if you do). But as of right now I don't have that many bills, I don't pay everything with my credit card either, so I don't know if it would be wise to get another card as of right now if I don't technically need one.

 

2. This comes to my second question where I was wondering, If I applied for a card, and even if I got accepted would I still get a hard inquiry? I currently have 3 hard inquires on my account that still have 16-18 months left and do not want another one... So I would need to confirm this before ever getting a 2nd card. 

 

3. My third and final question is, and let me know if this isn't allowed on this forum... I glanced through the rules and didn't find anything against talking about churning? I've done a lot of research into it and I'm very interested. I plan on once I have more bills/move out and am more financially independent to be making all my future cards that I apply for my churning cards... I would lose a little of credit in order to make money and earn points and I would also maybe even get a little credit from having so many accounts open for churning until I close some of them to rinse and repeat. I guess this isn't really a question more than it is a statement that I'd like to get your guys' a opinion on... Thanks.

 

 

My current stats as stated above earlier are:

 

Credit Score: 730-740 (Different apps tell me different scores)

 

Credit cards: 1 (Discover it)

 

Credit Limit: $1200

 

Total Accounts: 2 (Car Loan and Discover Card)

 

Payment History: 100%

 

AAOA: Only 7 Months.

 

Hard Inquiries: 3 (2 from discover, 1 from Amex)


1. If you don't need more than 1 card, you don't need more than 1 card. Period.

2. Yes if you apply for a card you will have a hard inquiry, sometimes even 2 or 3 (Cap One often pulls all 3 bureaus, Chase sometimes pulls 2 bureaus)

3. You should not "churn" cards. If you see a great signup bonus on a rewards card that will be good for you, it's ok to go ahead and get it. But you could damage your credit by churning.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 703 TU 704 EX 687

Message 6 of 10
SouthJamaica
Mega Contributor

Re: A few questions!


@Anonymous wrote:

Hey! Thanks for the reply. I read what you linked and it sounds promising, just a few questions.

 

You said a lot of people reported that their score went up 28 - 33 points? Would that still apply to me if I'm already fairly high sitting at 730-740?

 

Also, I don't know what an installment loan is, but I have a car loan currently, would that mess anything up? You said in the thread something about other loans but never really addressed car loans.

 

 

 

Also another question is, is there anyway to get my hard inquires that I have now taken away? Or do I have to wait the full 24 months? And I've heard that it's -5 credit per hard inquiry? Is that true? 

 

 

One last question is, if I were to churn in say 5 years, when I hope to have more expensives and be independent and all my current inquries will be gone. Do churners just have 5-15 hard inquires at a time??? I know the 5/24 rule and all of that but if you apply and cancel and churn on a bunch of cards you'll still have the inquries for 24 months correct? And most churners churn a lot in 2 years? So I'm little confused on that part? Because wouldn't you be losing a decent amount of credit? I know churners can afford to lose credit and inquires are low impact but still?

 

Does having multiple accounts (credit thinkness) help your credit loss for all the hard inquires you would get from opening so many credit cards? 


If you have a car loan you don't need another installment loan to get the bonus credit mix points, and you won't get any points by adding a loan. To optimize your utilization with the car loan, get the balance down to 9% of the original amount. When you pay it to zero you'll lose points, so at that time you might want to add a share secure loan and pay it down to 9% just before paying off your car loan.

 

Stop with the churning; I don't know why you think that's a good thing.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 703 TU 704 EX 687

Message 7 of 10
Anonymous
Not applicable

Re: A few questions!

So right now my loan through my credit union for my account is just a regular loan right? What is the differnce witha share secure loan? And how would I go about switching to that once I get to my said 9%?

 

 

And I don't know why you think it's a bad thing? If you have everyday expenses why not travel the world for free and pay those said expenses like you would anyways....

Message 8 of 10
Anonymous
Not applicable

Re: A few questions!


@Anonymous wrote:

Can you confirm that each inquiry is -5 credit score or is that wrong info I've received?

 

Also I have all the money to pay off my car loan right now, which is $6800 remaining, would it lower my credit if I payed it off in full right now? And if so why?


I suggest you read again through post #2 in that thread I gave you.  It explains the theory behind how FICO scores installment loans.  It talks about something called installment utilization.

 

Figure out what your installment utilization is.  Then read this from in that section especially closely:

 

When that % is close to 100, or if you don't have any open loans at all, then you get no FICO points from this factor.  But when the % is very low (say 1-9%) then you get most or all of the points from this factor.

 

By paying the open loan off, you'd be losing all the scoring points you currently have from having an open loan that is mostly paid off.

 

As far as the 5 points per inquiry goes, that is oversimplified, especially when a person has many inquiries.  At low numbers of inquiries it's not a terribly bad rule of thumb. 

 

Message 9 of 10
SouthJamaica
Mega Contributor

Re: A few questions!


@Anonymous wrote:

So right now my loan through my credit union for my account is just a regular loan right?

 

It's an installment loan

 

What is the differnce witha share secure loan?

 

No difference. A share secure loan is one type of installment loan... an installment loan secured by a savings account. Many of us, who don't have open installment loans, open one of those so we will have an open installment loan in our "credit mix" without getting ourselves into actual debt.

 

And how would I go about switching to that once I get to my said 9%?

 

 

 You don't have to switch when you get to 9%. Just when you're about to pay the car loan down to zero. The way many of us go about it is: Join Alliant Credit Union, take out a $500+ savings account, take out a $500 share secured loan secured by the savings account with a 48 or 60 month term, decline or cancel autopay, transfer $455 from the savings account towards the loan balance bringing the balance down to $45. Pay that off slowly over the balance of the term. Once the $45 balance reports the positive effects will be felt. On the downside, you will be getting a new account, which has a slightly negative effect on your scores.

 

And I don't know why you think it's a bad thing? If you have everyday expenses why not travel the world for free and pay those said expenses like you would anyways....

 

I don't care, do whatever you want to do. But (a) it's unrealistic to think you will travel the world for free, etc, unless you're a major business traveler, in which case you don't need to "churn" anything, and (b) if you do go into "churning" don't come crying to us when a bank takes adverse action against you some day.


 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 703 TU 704 EX 687

Message 10 of 10
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