Resources and Credit Limit

Anonymous · ‎12-02-2015

Are there any great resources online or in book format that any of you know about that would educate in credit knowledge? Currently my only outlet for info is this forum which I have been most pleased with but I am sure there is even more out there!

Is it beneficial to ones' credit score to have higher limits, say $10,000, vs. having a limit of $300 like mine? I understand that it could be beneficial with credit utilization but does the credit limit alone reflect on the credit report? Does it show that you are more trustworthy in the eyes of the credit bureaus? I am just dismayed after finding out that using 10% or less of my CL vs the 30% I thought I could spend takes me from about $90 to $30 that I can show when Cap1 reports. Doesn't really change my ability to live but it sure is hurting my pride!

Lastly, I currently have only one credit card and it happens to be a Capital One Secured card with a $300 limit on it. I have been looking around for two more cards that I would like to apply for in order to utilize the "three card" strategy that has been suggested to me. My concerns are that I will keep applying, being denied, and seeing my score drop from hard credit checks. Guess you might say that fear has a hold of me. My credit score is already terribly sick to say the least, I would hate to continue making it worse.

Equifax: 531

TransUnion: 484

Experian: 538

Grafton88 · ‎12-02-2015

How long have you had your card? After getting 3 statements you may be able to ask for a CLI(credit limit increase). You may also see an increase in your scores.

Do you have anything on your reports that are hurting you? Taking care of those can show a large benefit.

There is a book I saw on Amazon.com called "Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future (5th Edition)"

You might want to see if you can get it through your local library.

Sometimes a book can help you get started because of how it is organized.

Having said that the amount of information on myFICO is incredible and priceless.

Try going through the sticky messages at the start of each forum. Whatever you don't understand feel free to post a specific question. From what I have seen of these forums is that the two things people here like to do most of all is #1 APP for new cards and #2 help others.

Anonymous · ‎12-02-2015

Great comments by Grafton. I agree that, for this particular OP, finding a really good book might be the best start for him.

Another good thing for our friend here would be to join Credit Karma. The reason is that CK is free and would enable him to get a copy of his Equifax and TransUnion credit report as often as once a week. He would benefit a lot from getting really closely aquainted with his reports, learning how to read them, seeing how they change. I suspect that he has negative items on his reports or else his scores wouldn't be so low.

The OP asks:

Is it beneficial to ones' credit score to have higher limits, say $10,000, vs. having a limit of $300 like mine? I understand that it could be beneficial with credit utilization but does the credit limit alone reflect on the credit report? Does it show that you are more trustworthy in the eyes of the credit bureaus?

Yes, the credit limit appears on the credit report, but no that credit limit does not affect your credit score -- not in and of itself.

I am just dismayed after finding out that using 10% or less of my CL vs the 30% I thought I could spend takes me from about $90 to $30 that I can show when Cap1 reports. Doesn't really change my ability to live but it sure is hurting my pride!

Remember that you can always pay your card down to $0 many times during the billing cycle, so in theory you could spend over a thousand dollars a month on it. The important thing for you is paying it down to a small number a few days before it reports. Aim for about $10. That way you can spend whatever you need to but the credit bureaus will always perceive you as having 2-4% utilization. (10/300)

Once you get really familiar with your reports (and read your book) I suggest you join the rebuilding forum to learn how to get your scores up to a place where you can apply for another decent card. Good luck!

takeshi74 · ‎12-03-2015

@Anonymous wrote:
Are there any great resources online or in book format that any of you know about that would educate in credit knowledge?

Online? This site you're on right now. There are plenty of other online resources as well. I have no idea on books. Never needed one myself.

@Anonymous wrote:
Is it beneficial to ones' credit score to have higher limits, say $10,000, vs. having a limit of $300 like mine?

Not really in and ot iftself. Limits factor into revolving utilization which itself factors into Amounts Owed. If you haven't already read this and followed all it links then definitely do so. It doesn't contain everything you need to know. It's really just a starting point.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

That said, higher limits are an effect of having a better credit profile and income -- not the cause.

@Anonymous wrote:
I understand that it could be beneficial with credit utilization but does the credit limit alone reflect on the credit report?

Are you regularly pulling and reviewing your own reports? If not, you should be. At the bare minimum make use of the AnnualCreditReport site. You can answer this question yourself by looking at your own reports but the answer is yes. Limits are indicated on your reports. That's how your revolving utilization (balance[s]/limit[s]) is determined. Any scoring model will use the data in a given report to generate a score. Creditors will also review your reports to determine where your profile stacks up versus their underwriting critieria.

@Anonymous wrote:
Does it show that you are more trustworthy in the eyes of the credit bureaus?

CRA's are just record keepers. It doesn't matter if you're trustworthy in the eyes of the CRA's. What matters is whether or not you're trustworthy in the eyes of a given creditor. Each creditor determines what you qualify for using their own critieria. The report from the CRA and the score are just tools that they use to assess your credit profile.

@Anonymous wrote:
I am just dismayed after finding out that using 10% or less of my CL vs the 30% I thought I could spend takes me from about $90 to $30 that I can show when Cap1 reports.

You don't have to restrict spend to control reported utilization and with a limit that low you should only worry about exceeeding 30%. You can always pay down your balance prior to the report date of your card. 10% is only really suggested when apping for new credit.

@Anonymous wrote:
Lastly, I currently have only one credit card and it happens to be a Capital One Secured card with a $300 limit on it. I have been looking around for two more cards that I would like to apply for in order to utilize the "three card" strategy that has been suggested to me. My concerns are that I will keep applying, being denied, and seeing my score drop from hard credit checks. Guess you might say that fear has a hold of me. My credit score is already terribly sick to say the least, I would hate to continue making it worse.

You can only build at the rate your credit profile supports. In your case you may need to find additional secured cards until your credit is built to a point where you'd qualify for unsecured cards. Some credit unions also have more lax approval criteria and builders/rebuilders can find such CU's to be beneficial when starting out. HP's are a generally a relatively small factor though they do have a bigger impact for those with thin and/or poor credit profiles. Their effect, however, does taper and fall off quickly though that's "quickly" for the credit world.

If you're getting denials then don't just keep apping and expecting different results. Take the denial letter(s) with their reason(s) and use that as a starting point on working on your credit profile. You should really take a look at your reports to determine why your scores are so low to begin with and see if there are deficiencies that you can address. If you're willing to share some general info we can assist. You can get to a point where you can do this on your own.

@Anonymous wrote:
Equifax: 531
TransUnion: 484
Experian: 538

Also be aware of the specific scoring model when referring to scores and don't assume that all models are the same. The specific model will have an impact on the number generated. There are many models used by creditors and even FICO has a number of different models used by creditors. See also the Understanding FICO Scoring subforum and its stickies (don't overlook stickies in each subforum as resources as well!) for more information on the latter.

Are these FICO 8's? Again, there are reasons why your scores are where they are. It will help you to understand where you currently stand.

There's clearly plenty more you can learn from here so don't understimate the usefulness of this site. Read up -- in the forums, stickies and via the information provided by FICO. Ask questions.