When I started using the forums, my average credit score was around 620. I was 38 and never felt the need establish credit as a single person. I didn't have any cc's and only took out 1 auto loan at 17 for a motorcycle (paid cash for other auto purchases since then), and only took out 1 student loan while in college. Then I got married and wanted to do the things like married couples do - like home ownership. I checked my report -- no baddies -- whew! I didn't have a great score for good rates however. Thats when I joined myFICO. In the course of 18 months, I managed to get my score up to 720 with a few cc's. We purchased our house, refinanced 3 years later when I had a great score, and haven't made any other major purchase other than another car since then. My score has averaged over 800 for the last 3 years, and A LARGE PART OF MY SUCCESS IS ATTRIBUTED TO THE FORUMS ON myFICO.
I used the information I learned from this forum, applied it to my circumstances and my future goals, and modified the concepts to meet my personal needs. Through this process, I learned that there is a lot of valuable information here, however, there are several points that I would like to make:
It really doesn't matter how many cards you have, or how much available credit you have, or how often you use your card. Although the credit industry encourages shopping with your card, and using tactics like " lack of usage will result in an additional fee"; or encourages you to have high available credit limits so that you can run a higher balance; or emphasizes the usage of more credit cards to create a more balanced credit portfolio, THEY ARE ALL TACTICS TO ENCOURAGE MORE DEBT.
The truth is, 2 or 3 really GOOD cards, with a reasonable credit limit, is all you really need. No department store cards, no gas station card, Just a couple of cards that gets used occassionally - and only charge when you have the money to pay off the balance before the end of the month. The more cards you have creates a balancing act that results in carrying a balance and spending outside of your means.
I do use my AMEX card daily, only spending what my monthly budget allows, but this racks up points towards Home Depot cash rewards cards, and I've managed to landscape and build a wall around my house paying only about 38% of the actual cost after all fees are considered. That came up to a $6,000 savings.
If I have to make a charge that results in carring a balance, I wait until a balance transfer offer is posted, make my purchase on the amex, then transfer the balance to another card at a 3 or 4% interest with either a 9 or 12 month grace period. That way, I pay less than the cards normal rate.
In both cases, I WAIT until a sale is offered on the product that I want to make the purchase.
The other thing that I would like to share is setting a limit on what you comfort zone is for cc debt. The interest rate for cc's is terrible, and can keep a person from ever really being comfortable to assess their financial growth. By carrying large cc balances, we focus on just keeping up with the bills, not getting ahead. I have a total credit limit of $37,000 on my 3 cards, and the largest charge I made in the last several years was for a $2,700 purchase. That was paid off within the year and I only paid the 3% transfer fee. Meanwhile, all 3 cards continue to offer me a credit increase, but I don't accept them.
The bottom line is . . . be patient . . . don't focus on how many cards you have, how high you can make your available credit limit, or think that you must have debt to maintain a good credit score. It's the history that counts. Focus on the education, make the right decisions, and realize that the future will be good using sound financial decisions.
