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No debt?...then bad credit rating?

Posted by behaviorkelton (My Page) on
Mon, Jun 15, 09 at 9:30

I was listening to a financial adviser talking about buying a home for his mother. He said that his credit rating was in the 600's and probably wouldn't go higher due to his lack of debt over the years (I guess "lack of credit history" is more appropriate).

So, I enjoy a nice credit rating, but I don't want my recent debt-free situation to lower that rating.

What if I do this?:
Use my credit card for all purchases, but pay it off at the end of every month.
Does that count as a "credit history"?

BK


Follow-Up Postings:

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RE: No debt?...then bad credit rating?

Sure does!

I use my Discover card as much as possible, and pay it WEEKLY, using the money I WOULD have used if I was writing a check.

My credit score overs around 800...


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RE: No debt?...then bad credit rating?

Also, don't use more than about 30%-40% of available credit at any one time even if you intend to pay it off at the end of the month. The ratio between limit/used is an important part of your credit score. It supposedly is a good indicator of how well you manage temptations.

/t


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RE: No debt?...then bad credit rating?

If I understand correctly, your history of paying on time is a major factor in your rating. But they also look at how much debt you care carrying and its percentage of the total allowed debt in your credit account. If they think you're maxing out on credit, that will affect your score negatively.


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RE: No debt?...then bad credit rating?

If you don't have any other lines of credit, you are going to want to keep more than 1 credit card open.

Also, you don't need to use your cards for everything. A single purchase every couple of months will keep the account active. It will also keep your credit score slightly higher because almost 100% of your credit will be available at any given time.


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RE: No debt?...then bad credit rating?

" But they also look at how much debt you are carrying and its percentage of the total allowed debt in your credit account. If they think you're maxing out on credit, that will affect your score negatively."

DD recently replaced windows in her house for roughly $5,000. They had some kind of a 1 year no interest deal so she signed up for $6,000 credit just to make sure it covered everything and payed it off before the year was up. Now that account is showing as a negative for her because the amount she used was so close to the max amount!


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