54

A person's credit score is related to their risk of defaulting on a loan. When evaluating if your scoring model is any good, though, you can't evaluate the likelihood of default from one person, since every borrower either does or does not default. In order to calibrate a credit score model, you need to aggregate data from many individuals to determine ...


38

I just turned 19 years old and want to start planning for a future of good credit. A laudable goal. Should I open many credit cards now so that in 10 years I will have a good history with many agencies, No. or is it actually bad for my credit to open so many cards at once? Yes. Will I be setting myself up for failure by accruing too big of a cumulative ...


38

Option D: Pay bills using credit card. Wait for billing period to close and monthly statement to be generated. Pay the statement balance in full, and pay it on or before the due date. For credit card reward points, simply using your card earns the points, regardless of when or how frequently you pay the card. For credit score, actually making your payments, ...


32

Would a creditor actually see a thin file as a negative for me? No. You have owned two homes, did they have a mortgage? You had two car loans, and one now. You have two CCs. Does it seem like you have trouble getting credit? Most likely it is a marketing ploy to get you to borrow more, or more from one of their favored offers.


27

I'm totally unfamiliar with car leasing, which I thought might be a more affordable and suitable option right now Leases aren't an "affordable" way to get a car. They're a way to get an expensive car that you can't afford to buy outright. It's effectively renting a car, so you have nothing to show for it after the lease is up. I would not ...


25

Increasing the number of cards is a double-edged sword credit-wise. There's a trade-off between the amount of credit used (utilization), number of inquiries and open accounts (fewer is generally better) and average length of credit (churning accounts means a shorter average). The main factor in your credit score is a good payment history. From what I've seen ...


24

Credit scores are not completely transparent, but when I look at my score there's no mention of the magnitude of any events. Truthfully I have no bad events but the only indication is a count (0), not any indication of size. A bad event is a bad event. It doesn't matter if it's a $10 default or a $10,000 default - it gets reported the same way from what I ...


22

If I'm paying it off every month and using it for everything I buy, am I doing myself a disservice? Not from a credit score perspective. Your credit score is more a measure of how reliable you are with your debt payments and how much you use what credit is given to you. Low utilization and timely payments (of at least the minimum balance) are good - late ...


21

I want to know will this has a bad effect on my credit, etc? Closing a checking and/or savings account should have zero impact on your credit score. There is a risk if you close the account, and you have written a check and it hasn't been cashed yet. If that was to result in a bounced check or a debt to the bank that could impact your credit history. Also ...


20

Just open another bank account with a different institution. Walk in, sit down, leave with a new bank account and routing number. (You may be able to do this online with some institutions, but either way you need to fund the new account with some money you already have.) Connect it to your brokerage account. Initiate a transfer of money that covers the ...


18

The credit score is an evaluation of your credit history. It doesn't know how much you make. It looks at how much of your available credit you use. It looks at how long you have had credit lines. It looks at the number of on-time and late payments. If you have a very bad score lenders will either refuse your loan application, or they will charge a higher ...


17

Your credit score is devised by 5 components. Age of account Credit utilization Payment history New Credit Credit mix https://www.myfico.com/credit-education/whats-in-your-credit-score If you get a new credit card then that will be a negative mark under the new credit category. That negative mark only lasts as long as that card is actually new. However, ...


16

Besides the things you mentioned, there are a couple of other things that can cause your credit score to go down: Credit utilization could have gone down. As JTP reported in this legendary answer, having a credit utilization of zero can be seen as worse on the credit score than having a small but non-zero utilization percentage. It is possible that last ...


16

It only makes sense to make mid-period payments on credit cards when you need to free up available credit for a large purchase or are needing to keep utilization low due to incoming credit pulls for a loan (both to juice your credit score and to minimize debt to income ratio). Paying your statement balance each month lets you earn some trivial interest on ...


14

some old affordable car, say a 2008-2010 Nissan or Hyundai with at least 100k miles mileage" A Japanese* car of that vintage is not old, and 100K miles is just nicely broken in**. You would do better to look at say 5 years or so either side of 2000. Check out your local Craigslist. * I have no experience with Korean makes, but don't see why they ...


10

The FICO website suggests that credit mix determines 10% of your score. And while they don't offer much more detail, Credit Karma shows this on my account: Credit scores are important if (and mostly if) you plan to borrow money. This image is from FICO, and shows the possible cost of a low score. On a $200K loan, 30 year term, the difference is about $24/...


10

Your credit score is already excellent, and increasing it from here will not help you in any meaningful way. In my opinion, you should not do anything you don’t really want to do in an attempt to increase your already excellent score. You need to be suspicious of advice from places like Credit Karma when they tell you that you need more credit cards, because ...


9

I'm slightly concerned about the wording you used in this sentence: Will I be setting myself up for failure by accruing too big of a cumulative credit card bill? Maybe you didn't intend to word it that way, but it sounds as though you're thinking that if you simply have one or more credit cards, you might spend more money than you normally would, and ...


9

Anything under 5 accounts is technically considered a thin credit file. It's not ideal but its a relatively minor consideration compared to payment history, debt utilization,etc.


9

First of all, I'm not convinced that your credit score is a "percentage" (percentage of what?) Credit scores in the UA have maximums as well ,but they are less that 999 (and different depending on the provider). So I don't see how it can be translated as a "percentage". But as for the rest of the argument - a credit score is a measure ...


9

The "Personal Finance" answer to this is (relatively) simple. As Hart CO says in a comment, report her. What she is doing is fraud against you, your siblings, and whoever else is caught up in this - like "your" sub-let tenant at the rented property. But more realistic might be something of an "Interpersonal Skills" answer... ...


7

The point of the credit score system for banks is to attempt to make every customer equally profitable. According to the rating agencies, a customer with a bad credit rating is statistically more likely to stop paying installments on their debt (which means a lot of hassle for the bank) or even declare personal bankruptcy. That means the bank loses money on ...


7

Does using a credit card actually build up your credit score or do you have to incur charges by not paying it off for X amount of time to help with your credit rating? No. Absolutely, unequivocally NO. Anyone who says that is lying or repeating "conventional wisdom". If I'm paying it off every month and using it for everything I buy, am I doing ...


7

It's quite possible that they may do just that: convert your account from unsecured to secured. If they close the old account and send you a new card, don't sweat it. You'll have a credit history. To be honest, though, you're worrying about the small things, when you should really be worried about The Big Thing: paying your bill fully, on time every month (...


7

For many people, opening many credit cards is a recipe for total disaster, because they don't understand that any money they borrow has to be paid back at a high interest rate, and they get themselves in so much debt that they can't find a way out of it. And that WILL destroy your credit score. Only use a credit card if you have enough money to pay it back ...


7

Treating 30% of utilization as a rule to be followed is dumb. It is a natural consequence of using a credit card correctly, not something to do for its own sake. The right way to use a credit card is to buy the things you were going to buy anyway (assuming there isn't an extra charge for using a credit card), then pay the statement balance in full on or ...


6

I have a FICO 8 score that is fluctuating from 810-830 and the only reason code given is: Proportion of loan balances to loan amounts is too high If that message is the only one you have, and the score you have is more than 800 you have nothing to worry about. The score and message will not stop you from getting other loans or credit cards. The mortgage is ...


6

Option C: Pay bills using credit card. Wait until almost the end of the billing cycle, then do a lump sum payment of all bills for the month. This one. Make sure you set you credit card to "auto-pay". That makes sure it gets paid on time, maximizes the time you can hold on to your money, and you can't screw it up (which is an expensive mistake). ...


6

Are there any differences between reports of secured and unsecured credit cards and their effect on my credit history/score? No. The secured/unsecured status of your card is not reported to the bureaus. If I upgrade my secured cards to unsecured, does it have any negative or positive effect on my history/score? As the bureaus don't know if the card is ...


5

"Credit Scores" are an over-simplification of the UK system, so it's worth understanding what happens behind the scenes. We have four credit reference agencies, Equifax, Experian, TransUnion and Crediva. Each agency collects information about you, and sells that information to companies that may be considering offering you credit. The company then ...


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