Crossing The CC Rubicon

[Anonymous]

Ah, glad to see you beginning that long journey to the nirvana of credit. I received my first CC from Sears decades ago while in grad school. Every month I would charge one item and when the bill came I would pay it. Over the years I applied for many cards including gas cards, store cards and bank cards. Each was always paid either on time or if I could afford it zeroed out when the bill came. Keeping track of multiple cards is stressful so now I have dropped down to three CC's, all payable and checkable on-line, two Visa's and one Amex. The collective limit on all my cards is 37K so I have plenty of credit reserve if I make a major purchase to keep the FICO up.(do not use over 30% of credit). I mostly use the 20K limit BoA card because it allows prepayment so that I send money to them prior to using the card so my card becomes a debit card with the protections of a CC. This insures on-time payment(I pay before I spend) and helps me manage my spending. If I deposit 1.5K and am down to $200 I realize quickly that I have charged 1.3K that month.  If your card has a balance, you make a small payment and then charge more it is very easy to lose control of your spending. My system prevents that.

Am I still excited about having good credit? Not really but it really helps when I negotiate a purchase. My FICO is 805 at the moment and I got there by always paying on time, not using all my credit, and having a manageable number of open accounts that can be tracked on line. The nice thing about good credit is that I can walk into a car dealer without a penny in my pocked and drive home a spanking new car. That of course is also the scariest part of having good credit. Buying and borrowing is way tooooo easy! If you are an impulsive buyer you do not want to walk through the mall with a 20K limit Visa in your wallet or purse.

[Anonymous]

I've recently managed to "come in from the cold" (credit wise), and now have two platinum cards (low CL) which is where I want to be. But it sure was neat yesterday while checking out at Target to have the cashier say, "You've been pre-approved for a Target charge card". I declined because I don't want any more hits on my credit, but I like being on this side of the credit divide for sure.

[George2037]

Just saw this in the Hot Topics e-mail and just had to post.  Reading through this I've come to realize in the course of two years I've gone from the shamefull head down response at the counter "No I'll just pay cash".  To the poud knowlege if I do say yes to the Store card I'll get it but still say "No I'll pay cash" (gotta keep the IQ's down ya know, lol).

One year ago I had one card with a $500 limit.  I lost so much money because of missing sales (not enough cash at the time), or not being able to get that one thing for my son's birthday.  Now I have $15k in available credit and a FICO that will let me do just about whatever I want within reason of course.   Waiting for payday isn't my only option anymore   

I keep an excel spreadsheet that caculates my paycheck according to hours worked (takes out taxes, 401k, savings, CU payments), available credit, UTL%, payments (utilities, car, ins), savings, and just about everything else so when i do want to make a purchase I know what I can spend.  Now I know what effects my FICO I can estimate what it is at certain times.  I can figure how long it will take to pay it off and how much I need to pay towards it to do it faster.   Heck, I know when I spend $100 today how it's going to effect me as far out as Dec 2008!!!  I know when every CC will be paid off to the day, I can see the day when I have enough cash in the bank to pay my Car and Motorcycle loans to Zero.

Once we are at this point it's a great feeling, but having control in our hands once again *shredding the sub-prime CC offers* is one to cherish and protect.

[Anonymous]

Kewlness all around. Great post- I think I am just on the verge of crossing the Rubicon- I am definitly done for the year and prob. longer- AM NOT APPLYING FOR ANY MORE CREDIT - ESP. CARDS.  It was a rush apping and then getting your approved- I will admit that. However, now I am to the point that I want to close some cards (one store card and HSBC so I will not have any cards that charge a fee.)

Now I am in final credit repair mode- trying to get PFD for two small collections that are still showing, paying of heloc and stud. loans- trying to get as debt free as possible besides the mortgage and rotating the cards to play the game...

awesome post.

[Anonymous]

I just turned 29. Over the past 6 years I got my credit in order. I suffered with high interest rates, shame, and fear of not getting into an apartment when I first moved to California straight out of college. My score was 550 at 23! **bleep** discover card, lane bryant charge card, and citibank calling card I got in college!! I will not apply for a discover card to this day because that negative account stayed on my credit report for 7 years (May 2000 - May 2007). I resent discover even though I was responsible for the mess. They don't lie about that 7 years!

I paid my bills on time, and my FICO scores reached past 710 mark 3 years later - as long as you pay your bills on time the negative accounts will lose strength against your FICO score. Now I am very close to 800 (777, 780, 785). I am a member of a credit union which offer very good rates on ccs and car loans, etc. So I have good rates on my ccs and my car loan (3.9% back in 2004). I also qualified for a credit card with a 15k limit and 7.9% (MBNA, now B of A) all with my 710 score at the time.

I paid off my student loan at 28 which boosted my score. All my ccs (AMEX, MC, VISA) have 15k-20k limits and higher now. I have 4 CCs and a best buy cc, and a busybody cc. That's it. And I charge VERY LITTLE only on one of CC (less than 20% of the CL). I seldom use the other cards and don't use my charge cards. So my credit scores stays high and continues to increase.

I attribute my success to the experiences (financial mistakes I made in college) and the lessons I learned in my early 20's from those mistakes. I will never go through that again if I have anything to do with it. I watch my credit reports/scores closely (to prevent identity theft/fraud). I will be debt free in couple of months, and plan to use my cc's for recurring expenses (gas, car insurance, etc.) to build upon my airline mileage points accrued so far and to keep my CC accounts current- and will pay the bill in full every month.

Stick with it, pay your bills on time, and your score will rise faster than you think. You will not have to wait 7 years for your score to go up, but you will have to wait 7 years for a PAID OFF negative account to go off your credit report. The goal is to get the negative stuff off and have a high score.

You will be able to buy a nice house with an affordable loan in your early 30's. There's no rush for the american dream in your 20's (unless you want a house in your 20s and that's fine). I personally want to get out of debt first in my 20's then buy a house. You can also invest your money in the stock market and keep renting (it's cheaper) and come out ahead if the market is strong - and buy a house later.

[Anonymous]

:good for you. in hindsight, i wish i had taken charge- get it- ehehe- made a pun-

I am a little bit older than you- 35 but I will never, ever go bad to my wayward ways of not caring about my fiscal health.

[Anonymous]

Congratulations Chucky!!!!

Last year I went to buy a truck and decided not to pay for it out right.  I was pretty proud of myself when the salesman came back to me and said, "looks like you can buy anything you want."  When I asked why he said my credit score was 824.  Makes one feel very good and very powerful. 

I also concur that the most important thing you can do is pay on time, no matter how much you pay. And, by the way, I paid off the truck this month. 

[Anonymous]

I feel I am on the "verge": of the "Crossing The CC Rubicon"

getting close to my 200 point increase in one year.
$1800 in available credit to 20K.
Keeping UTL under 10% is alot easier now.

Playing the game 2 more moths and the last 2 of my negative accounts will drop.

They need too start giving a FICO class in High school and college.

[Anonymous]

I didn't know that "Crossing the Rubicon" meant just losing all joy in getting new cards.  If that's the definition, then I passed it when my husband and I had over 15 cards with a combined buying balance of around $130,000!

We used to joke (when housing prices were much much lower in the Northeast) that we could buy a condo on our credit cards!

I attempted to close many of them, but was told not to because, even though we didn't use them at all, our credit score was partly based on our credit limit as opposed to our actual credit card debt.

An attorney friend thinks of credit card companies as "pimps".  The way they entice us to "get a new card" and the glamour of having so much "trust" placed in us by the "big money banks".

I keep careful track of all of our finances and I love the Internet for that.  It is so much better to catch an error on the day it is made then to get that letter (which always comes on a Saturday when no one can help you) and have to call back on Monday.

When we were younger and had only a few credit cards, our FICO was always over 800, even as high as 854!  We fell into the trap and had to declare bankruptcy.  Our FICO was then 650 and no one but no none would even give us the time of day.

One good thing that our attorney friend told us was before anyone declares bankruptcy they should get at least two new credit cards and not use them until after the bankruptcy is declared and final.  Those two cards will not go into the bankruptcy because they were never used and because the issue date would be either just before or just after the bankruptcy.

We did that and now 6 years later with our bankruptcy just about over, we have another 10 cards with a combined balance of over S100,000.  For a while after the bankruptcy, if they sent the card, I took it, because if we applied they would deny us.

Our FICO is back up to around 730, but I bet it will never go back to the high previous levels.  It was enough though to get a 6.35% rate on the car I bought this year instead of the 9% my husband had to pay after the bankruptcy.

Now I use only one credit card and my debit card to buy.  If I can't afford what I want on that, then I just wait.

Message Edited by September on 10-02-2007 06:25 AM

[2anewu]

Wow! Great post Noah and All. I am still trying to get my scores close to 700. I have had some bumps along the way, but I know that by March 08 they will be there. I am waiting for a judgement to fall off in March and one collection this month. I have to pay down my util and should see an increase. Good journey's to all.