There will be a lot of people who will be glad to walk you through some key stuff regarding the relationship between card use, amounts reported to the CRAs, when the card reports to the CRA, a concept called "credit card utilization", and so on. SouthJamaica is a contributor here who has a real gift for breaking that stuff down in an easy to understand way, so maybe SJ will see your post and chime in.
I'll give you a few more thoughts before I turn in for the night. See below. Also, very helpful would be to know whether you have pulled your credit reports before. Not scores, but reports. If so, when is the last time you did that, which bureaus did you look at, what tools did you use to pull the reports, and how comfortable are you understanding what is on them?
@Anonymous wrote:
Thank you for that response, very detailed and helpful. Certainly I need to do homework on my own - I've done some in the past but perhaps not from the best sources. Below is a list of the credit cards on my reports, with the pertinent details:
Credit cards of my own:
- USAA: opened 10/2013. Limit 10,500, has been increased twice automatically, I assume due to level of use. Balance is 1,500 currently, I could use it less if I wanted, but the increases have helped my score . . .
You don't need to use your cards less (as far as your credit score goes -- obviously controlling spending is a good thing for money management) A college student with only one credit card with a $300 limit can neverthless spend $2000 a month on it and have a great score. The key idea is learning how to controll the balance that gets reported to the credit bureau. This happens once a month, and for most cards it is the day after the statement prints with the amount reported being the "amount owed" at the top of your statement.
The credit limit increases have not in themselves helped your score. What they did is make that $1500 that was being reported a smaller portion of your credit limit. But if you had paid your card down to (say) $50 shortly before the statement printed, then the amount that would be reported would be very small and again you'd have a very small ratio of debt reported to credit limit. That's why the college student in the example above can pay his $300 limit card down to $10 before it prints and secure a very low "credit card utilization."
Thus it is fine that you got the CL increases, but all they are is a tool of convenience. FICO does not give you an extra points for having a big CL.
- Discover: opened 5/2015. Limit 1,390 . . . so far I've only used it for a 0% balance transfer promotion, small balance.
- Macy's card: opened 10/2013. $600 limit, no balance. My wife occasionally uses it when there's an extra discount for doing so.
Cards on which I'm an AU (none of the described activity is by me):
There are two reasons to be an AU on a card. One is its intended purpose -- the primary card user wants a loved one (son, wife, etc.) to be able to use his card and make purchases with it. The owner of the card is authorizing someone else to use it: thus authorized user or AU. The second reason is its tangential credit benefit. Here the owner of the card makes someone an AU so that the account will appear on the AU's reports, so that the (son, wife, etc.) will get all the benefits of having this record. Here the scenario is just the opposite: the ideal AU situation (in the second sense) is one where the AU never makes a single charge on it and for the most part neither does the primary owner (of if he does he pays the card down before it reports). The account sits on the owner's and the AU's reports, with a balance of $0 or the occasional small balance.
You do not want to be on mom and dad's cards for the first reason. You are in your 30s, have your own job, and make well over 200k a year.
So you should examine whether these cards are helping you out in the second sense, And here they are far from ideal. The owners are running up vast charges on them, which to the FICO algorithm looks like you are doing that. You are running up vast debt and it is being reported each month to the CRA, e.g. a charge card with a $30,000 balance, or a credit card that is nearly maxxed out.
The fact that the 30k Amex balalnce is later paid off is not taken into about by FICO currently. All it can see is that you are running up big bills (bills which could have been hidden from FICO if the owner paid them off before the statement printed).
Note also that you do have a very well-behaved AU account in this sense: namely the Chase Mastercard. It sits on your report with a small or $0 balance pretty much all the time. Great! It's the other two that are worrisome.
- Amex: charge card, opened 1982. It's used extensively for business purposes (~30,000 per month) but no balance carries from one month to the next.
- Chase Mastercard: opened 2000. Limit 1,900, $0 balance, basically not in use.
- Discover: opened 2000. Limit 20,000, used extensively, recent balance has been in the ~15,000 range.
Remaining accounts in the report are student loans, which also is something I'm trying to read up on regarding consolidation.
My advice is to take a hard look at that Chase Mastercard. If you are lucky, it will have a very old age to it. In that case, keep that one around for a few years, while you are beuilding up you scores. But the other two AU cards, which are reporting huge nearly maxxed out states, I would find a way to get removed from those. Then as far as as your credit cards, try to do the following a couple months, Make all the cards on your report read as though they were $0 balance. All except one card which can report a small amount , like $100
