5/20/2009

Yes it is true under the circumstance that you wanted a waiver on your annual fees, they refused. If you are willing to be a sucker and pay annual fees, they will be happy to keep you even if you do not use your card even once.

I have never heard of the, "if you don't use them, you lose them," philosophy on credit cards. This has not been true in my case. I have a few cards I haven't used for years, and the company hasn't closed them out.

Having a 0 Balance does not mean you do not spend - it simply means you pay off the balance by the date due. You can spread out your spending on your 4 cards but just remember to pay off the balance by date due. When your annual fee is due, ask for a waiver based on the fact that you spend on their card and make full payment.
Good luck

ARod and HJM, why do you two agree that I should keep the Orchard card open? If I am turning to teir one cards soon, I dont need Orchard anymore. I know that they have been the one to help build my credit history, but what would be the price I pay if I kept it a sock drawer? Lets seee

1. $1300 cl/4 years= $325 per year - $49 anual fee= $276 per year

If I add the intr to a balance it would be rediculos. Is this card worth keeping? Nooo way. What kind of trade line is worth $1300? None! I dont need these cards when I go Tier one. Didnt you guys hear what Eric and Porgy said when

1. Eric balance transfered his older subprimed cards to his new tier one accuonts and his scores went up

2. Porgy closed a tier one accuont and his scores went up

Orchard is really bringing me down. $1300 in four years give me a break. It's better to get rid of it. I only want tier one accoutns and a few department store cards, the ones that gives nice limits. If my scores dropped 50 pts because of orhcard, I can wait to get it back up through my tier one cards. I will have fulfilled my credit history then, and will have no use for applying for any more creit cards. Orchard is like the pyramid scheme, once you build and bell out, you should say thank you and keep-a-steppin becasue you got what you came there for.

Whew! You go Craig, your information is an A+. I clearly understood everything you just said w/o misunderstanding one sentence. Another thing that you said about going to a mortgage broker...paying off certain credit credits to qualify for the best interest rates...etc, was so interesting because I plan on purchasing my first home in the near future and I never thought about paying off my debts before applying. I have heard similar information regarding mortgages seeing more in-debth details about your credit. Is it true that they can see items that have fell from your report due to statue of limitations? Another thing I heard was that when they pull your credit report, they usually pick the one in the middle (even though they see all three). I really like this information that you have shared, I KNOW that someone else will see that it was helpful for them also. I will be back as soon as run across some more question. Now you are stuck with me...lmao!

Great info Craig, thank you.

Hi Meya~

Regarding the carrying of balances;
Creditors do not necessarily report to the credit reporting agencies on your statement issue date. When they report the account information, it includes the following information, current at that moment (but not always everything listed here); date opened, current balance, RECENT HIGH BALANCE, high balance, recent payment and current payment status (30,60,90 days, etc.). The fact is that your RECENT HIGH BALANCE and payment status are the significant items and not that the fact that you have a zero balance at the time of their reporting. Paying off your balance monthly or sooner does not diminish or "erase" your RECENT HIGH BALANCE. I am issued an American Express thru an employer and the charges exceed $5000 monthly at times. The balance is paid monthly by the employer with no carry-over. This situation has significantly increased my scores! Potential creditors can still see how I pay my bills - I pay them in full every month. In my personal experience, I find that if I don't use a particular credit card for a long time, they send me a letter with an enticement to do so. I've never lost a credit card because of not using it but instead a store or gas credit card has been turned into a branded Visa or Mastercard after a long period of non-use.

Regarding FICO calculations;
The following score disclosures, Equifax/Beacon, Experian/FICO Risk Score and TransUnion/Empirica are most commonly referred to as "bureau credit scores". Fair Isaac Corporation (FICO) also develops credit score versions for different agencies but they are different numbers and are periodically updated to reflect current consumer loan repayment rates. I would assume that what you are referring to are report summaries. There is a lot of misinformation regarding how FICO scores are calculated (which is *not* the average of your three bureau credit scores - the most common misconception). If you are interested in an actual FICO credit score evaluation then I suggest you speak with a mortgage broker. Each time I've been this route, the broker has told me that in order to qualify for the lowest rate available, I would need to pay off whatever credit card they named at the time. For instance, "Your scores will increase if you pay off this Discover balance of $6500 to qualify you for the lowest rate" or something to that effect. Never has it been mentioned to me that it would be a benefit to my score(s) if I paid off a "group" of accounts. However, I have never been in a situation where 90% of my available credit is utilized. No offense intended but I would have a heart attack if I found myself in that situation.

Lastly, let me say that what works for one person (and their credit situation) does not necessarily work the same way for another person (with a different credit situation). For instance, all of my recent score reports had these notations;
"REGULATORY MESSAGES: THE NUMBER OF INQUIRIES ON THE CONSUMERS CREDIT FILE HAS ADVERSELY AFFECTED THE CREDIT SCORE WITH NO DEROGATORY INFORMATION FOUND ON THE FILE" - Referencing 7 (SEVEN!) inquiries in 12 months!

Sorry this was so long and drawn out.

I hope I've answered your questions with relevant information without causing confusion,
Craig~

FICO calculations with regard to credit card utilization are based on a "per card" basis. Having a high balance to limit ratio on one single account could result in a negative result. FICO calculations are not determined by a method of "total" credit available verses "total" balance/amount owed. Further, creditors report "recent high balance" to the reporting agencies so paying them off prior to receiving a statement is not a negative factor. Carrying a balance is not looked upon more favorably as paying the balance in full each month (or prior to receiving a statement, for that matter).

Hi Craig, I have a question. When you stated. "FICO calculations are not determined by a method of "total" credit available verses "total" balance/amount owed" I sort of became lost right there. When I pull my credit report, I have a summary that breaks down exactly what you said they don't do. If what you said is true, then why does my scores drop when I hit over the 35% range? Creditors have sent me denial letters based upon what you stated above. And my credit monitoring says that "I am using over 90% of my total credit available which is why my scores are low. Can you please respond and clarify that for me? I would really appreciate it.


One more thing, If you do not carry a balance from time to time, how can another creditor tell how you maintain your bills or how can they tell if you pay your bills on time? I was always told that if you have credit and dont use it, it makes the other creditors think that you are afriad that you may not have all the funds to pay them back. Not using your cards (or showing a balance will slow your scores down the only thing that will increase them is history. Evertime you make a payment on credit cards it increases your scores, so how will it increase your scores if the creditor has nothing to put on your credit report but a 0 balance every month? Sorry for all the questions, I am just staying on top of my finances and learning from individuals like you.

FICO calculations with regard to credit card utilization are based on a "per card" basis. Having a high balance to limit ratio on one single account could result in a negative result. FICO calculations are not determined by a method of "total" credit available verses "total" balance/amount owed. Further, creditors report "recent high balance" to the reporting agencies so paying them off prior to receiving a statement is not a negative factor. Carrying a balance is not looked upon more favorably as paying the balance in full each month (or prior to receiving a statement, for that matter).

Do you mean 35% utilization on my CapitalOne card only or all of my current available credit?

All of them! I dont know why they do this but, I guess it is the credit life. I think this is FICO's request. I am over 35% with a few of my creditors so I don't let that bother me as long as I know that I am not applying for nothing else in the near future.

Having a balance and paying it off is two different methods. Paying it off before your grace period shows that you paid in full but it does not show other creditiors how you pay on a stable basis or over a period of time. They like to see some few months of carrying a balance. As long as you stay below your 35% utilization, your balance will not effect you.

Do you mean 35% utilization on my CapitalOne card only or all of my current available credit?

Having a balance and paying it off is two different methods. Paying it off before your grace period shows that you paid in full but it does not show other creditiors how you pay on a stable basis or over a period of time. They like to see some few months of carrying a balance. As long as you stay below your 35% utilization, your balance will not effect you.

I have 4 credit cards and 3 currently do not have balances. I am afraid of having balances on all my cards. But from what I have been told "If you don't use them, you will lose them". What is a good method for rotating my credit card usage so that I not only increase my credit limits and scores but I prevent the loss of credit due to lack of usage.