@CoffeeLover wrote:Wow, thank you soooo much to all of you for helping me putting this mystery pieces together!
I didn’t realize the expectation around no-balance revolving accounts. I’ve always used my cards for specific purposes, like maximizing rewards. For example, one card for travel, another for groceries, and so on.
From what I understand now, it sounds like I should have “dummy” revolving accounts with zero balances if I want to keep using my current cards and maximize my credit score. It feels a bit odd to do that (I’d prefer not to have more cards than I actually use), but it seems like that’s just how the system works.
Crazy, isn't it? Pay off all cards and have 0% utilization? Score goes down. Pay off your car or home loan? Score goes down. Close a card that you no longer use? Score goes down. It's like they punish you for good behavior. Sigh...
You sound very responsible and wise in how you manage your finances. Your score will rebound. Everything I've read says as long as you are above 750 or so, you are getting the best rates and benefits. My guess is you'll bounce back to 810s+ by March.
@CoffeeLover wrote:Wow, thank you soooo much to all of you for helping me putting this mystery pieces together!
I didn’t realize the expectation around no-balance revolving accounts. I’ve always used my cards for specific purposes, like maximizing rewards. For example, one card for travel, another for groceries, and so on.
From what I understand now, it sounds like I should have “dummy” revolving accounts with zero balances if I want to keep using my current cards and maximize my credit score. It feels a bit odd to do that (I’d prefer not to have more cards than I actually use), but it seems like that’s just how the system works.
there's also something else to consider
not all credit scores of the same credit score are equal when it comes to underwriting, a strong credit profile can be important too
compare these two profiles:
3 credit cards
10 years age of credit history
average limit of cards $500
no loans
15 credit cards
3 paid off car loans in the $40-75k range
active 500k mortgage, paid down 75%
average limit of cards $10,000
10 years of credit history
both profiles have the same score, who would you like to lend to?
it may or may not matter for interest rates on a mortgage or a car loan, but having a stronger profile can definitely help for new credit cards
there's nothing wrong with only having a couple of credit cards and never building out a robust credit profile with a ton of products, just a thought to consider that an "820" credit score isn't the same as other "820" credit scores
@GZG wrote:3 paid off car loans in the $40-75k range
active 500k mortgage, paid down 75%
10 years of credit history
Wow! Bought 3 cars and paid off $375k of a half mil loan in 10 years! That's a heck of a job straight out of college!
@Varsity_Lu wrote:
@GZG wrote:3 paid off car loans in the $40-75k range
active 500k mortgage, paid down 75%
10 years of credit history
Wow! Bought 3 cars and paid off $375k of a half mil loan in 10 years! That's a heck of a job straight out of college!
seems the example was a tad too illustrative or magical 
@GZG wrote:
@Varsity_Lu wrote:
@GZG wrote:3 paid off car loans in the $40-75k range
active 500k mortgage, paid down 75%
10 years of credit history
Wow! Bought 3 cars and paid off $375k of a half mil loan in 10 years! That's a heck of a job straight out of college!
seems the example was a tad too illustrative or magical
Actually, it could be quite feasible with the right career (e.g. investment banker) or an inheritance. Even college athletes are getting NIL deals these days.
