Tips and Tricks to improve credit?

[Anonymous]

Okay so I am 20 right now.
Have: Amazon Prime Card (4 months old)
PayPal Credit (6 months old)
TDECU Credit Card (exactly one year old)
Kohl's Credit Card (1.2 years old)
Firestone Credit (4 months old)
Capital One Credit Card (3 weeks old)
A couple of Affirm Accounts right now (couple months old)
$14k Car Loan with $7k left on it (one year old)

AAoA about 7-8 months

Utilization rate is about 50%
Credit Score is 649 and 655

[Anonymous]

We can help you better if we understand what your "should" means.  (You write: Should I finance them? Or just buy it with cash?)

It sounds like you have the cash to buy them.  But you want to know what action you should take to help your credit score.  Is that right?

If so, then what you should do is to pay cash for them.  You already have plenty of accounts (including a car loan) and you won't benefit by adding more. And this way you will be making sure you are not adding an FC account.

Then develop a plan to pay all of your credit cards off entirely.  All the way down to $0.  That will save you a lot in interest and will also help you out a huge amount with your credit score.  Once you pay off all your cards, you can begin to use them naturally, just for whatever you really need, and always pay the balance on the statement in full.

Your score will benefit if you have several cards with a $0 balance and if you keep your total utilization low.  (Also be sure to keep any card you do use under 50%.)  Whenever you need your score to be its highest, pay all your cards to $0 except one which can report something small.  Your score will go up within the next month.

[Appleman]

At this point I would not apply for financing for the items you want.

Is the PayPal account a hidden trade line (meaning do they report to the credit bureaus)? If it is and they offer a period of zero % interest that might be a way to finance your items.

The next goal should be to get that utilization below 30% with the ultimate goal of no revolving debt. There are certain levels of utilization that will improve you score as you pay down your debt.

With time your accounts will age, your scores will increase and you will begin to have new and better choices for credit. Credit is a marathon not a sprint. Sometimes it just takes time to make the climb to better scores.

[Anonymous]

Wow thanks guys.
And as for PayPal Credit I have read that they do not report to credit bureaus, which is a big shame. I have a $2000 limit on that account.

Also have Affirm which I'm not sure if they report either.

How should one eliminate their debt?

Should I try to pay them off as soon as I can? This would leave me with less money but also I would save hundreds in interest.

Or should I just pay for a few months? (More interest but I wouldn't be empty on money)

Thoughts?

[driftless]

IMHO - avoid threads like this one that you started and similar ones.. Scamming the system doesn't work. Live within your means. Get your utilization done to 1 - 3%. Get a couple of Cap One/Discovery and GROW them. PIF every card, every month.

[Anonymous]

I think he/she is a 20 year old with a very legitimate question and concern. I can see my younger self battling with this idea. The best thing if you have the money just pay for it Cash since you have lots of cards with balances on them. Financing them will require a new acct and you might not get approved for a barclay card. You can also use paypal if you need to have access to some cash and take advantage of their 0% interest but it wont help your credit score in a positive way.
Good luck and always live under your means

[Anonymous]

Thanks!

And I do not understand what scamming the system means....

I just want to know the smart choice, that was it.

Nothing more nothing less.

[driftless]

Point taken, please disregard my scamming reference.

[Appleman]

VCAlan,

You are seeking the advice of others which I believe will be helpful in the future for your credit well being. I think I see the perspective of the other poster and the scamming the system comment. It rarely works that one can borrow themselves out of debt.

Take a look at YNAB (you need a budget) for one system to start budgeting your money. There is a free 34 day trial and there are a lot of great short videos discussiing how the system works. The program will help change your perspective and/or relationship with money. Previously, open credit limit meant it was time to spend for me. I now realize that the credit score game is important and I carefully spend my money. (Note there are many such programs availble)

Don't get me wrong, I still like nice things, I just make sure I can afford them before I rack up the debt on a credit card.

You have a desire to purchase some new things for yourself. I believe putting them on the credit card or applying for new credit would likely have a negative impact on your current profile.

However, related to the hidden trade lines like PayPal, there is a way to not hurt your score.. This hidden TL allows you to finance a purchase without is negatively affecting your credit (showing as increased utilization). If you can obtain 0% financing on a hidden trade line and are committed to paying of the debt before interest kicks in, I say go for it. Just make the payment part of your budget.

Most conservative financial people will tell you to save the money and pay cash. Credit cards are indeed a double edge sword and you need to leverage them for you long term goals. It is much more fun to see cash back and points accumulate than paying interest to the CC companies each month.

[arizonahd]

One thing I recommend which is probably a total "duh" to most people on here (but I do run into people who fail to do this): make sure every credit card you have is set to auto pay. While this is not going to solve out of control balances, it at least prevents stupid late payments. Every CC I have is set to autopay the minimum due, including my store cards. One bonus is that it acts as a reminder when I review my bank account, if I see the minimum payment pulled, I will open the account and pay it off if possible. 

I also have my car and utilities on autopay, the only bills I have to physically process is the mortgage, water bill (city doesn't have auto pay), and our landscaper. 

But yeah, keeping utilization and inquires down is the majority of the work to get a good score.

Also, when I get a new loan, I usually do it in the spring when I do my end of year review (for tax time). Most of my inquiries happen around this time, for example, I might do a BT on a 0% apr card and by next year have it paid off at the same time. My current score is 800 and my wife's is 820 (she always wins) so it is working thus far.