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Keeping high credit rating without debt

Posted by lyfia (My Page) on
Wed, Aug 30, 06 at 21:30

I've searched and found a few threads that mention what goes into the credit ratings. I'm fixing to pay off my student loan and last year paid off my car note and credit cards. All I will have left is the mortgage (which currently is good for tax deductions and too much to pay off soon). I currently enjoy the benefits of having a high credit score (translate - low insurance rates) and I'd like to stay there.

Will the following help?

Keep my credit cards open. All are at least 5yrs or older and then just use one and pay it off every month (I get points so I use it for purchases etc. to get the rewards as it doesn't have a yearly fee, but pay it off every month)?

Or is the above not sufficient? Do I need to carry a balance?

Anything else I can do to keep the score high (other than the obvious of paying on time)?


Follow-Up Postings:

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RE: Keeping high credit rating without debt

I googled 'best credit score' and found several articles.

here is a good one from CNN MONEY

Here is a link that might be useful: CNN MONEY-best credit score


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RE: Keeping high credit rating without debt

chemocurl thanks that is the information I've been able to find too, but nothing mentions when you don't have a balance and pay off every month. Does it count as a balance?


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RE: Keeping high credit rating without debt

Maybe this is what you are looking for.

I have copied it from MSN Money.
"What many people dont know is that credit scores dont distinguish between those who carry a balance on their cards and those who dont. So charging less can also improve your score -- even if you pay off your credit cards each month.

Your credit-card issuer takes a look at your account once every month or so and reports the outstanding balance on that day to the credit bureaus. This snapshot doesnt reflect whether you pay off that balance a few days later or whether you carry it from month to month.

Below is the link to the entire article.

The way I read it, is that it probably wouldn't make any difference to use the card, thus showing a 'balance' each month of a few hundred, even though it is paid off each month. I may be wrong though.

Have you gotten your credit score?

Here is a link that might be useful: MSN Money-Beef up your credit score


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RE: Keeping high credit rating without debt

chemocurl, THANK YOU!! Yes that was the info that I needed. Then I'm in good shape as I generally have at most a few percent of my total limits.

At what point does getting too high of a limit become bad though. The credit card companies often just raise the limit without me asking for it, however I would never dream of using the limit I have.


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RE: Keeping high credit rating without debt

Keep my credit cards open. All are at least 5yrs or older and then just use one and pay it off every month (I get points so I use it for purchases etc. to get the rewards as it doesn't have a yearly fee, but pay it off every month)?

How much are you putting on it each month? and then paying off each month, if you don't mind me asking.

I too use a card (for convenience) and pay it off each month. It ranges from $300 to maybe $600 usually, unless I charge something major, like a riding mower. In a case like that it would maybe show $1500 one month, and then $300 the next...so I doubt it would really make any difference....but I may be wrong.

Sue


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RE: Keeping high credit rating without debt

You don't need debt to have a good credit rating.

In over 33 years of marriage, we've only financed: 1 home (30 year mortgage paid off in 15 years) and a couple of cars--both paid off well before the length of the loans. I do have one credit card, but in 25 years have never paid a penny of interest on it--it's paid in full at the end of the month. And we've never paid a single bill late in the course of our marriage.

Our credit rating is fantastic. I just bought a very expensive new car a couple of months ago. The salesperson was blown away by our credit score, and we got a phenomenal interest rate (it was a new 2007, so there were none of those 0% interest rate deals available on it--but we came pretty close, just on the basis of our credit rating).

I know, that how we handle our finances flies in the face of what the 'experts' say--but in my experience, paying bills responsibly seems to be the real key to keeping your credit rating healthy. I don't believe that you need to be in constant debt to have a good credit score--not at all.


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RE: Keeping high credit rating without debt

Sue, mine would be right there with your values, except at times I use it for much higher as I will pay it off as soon as I get the bill. Ie I bought my car with cash and put as much as the dealer allowed me on the credit card so I'd get the bonus points and then when I got the bill I just paid it off. This got me earning extra money in interest while waiting for the bill and got me points that I can cash in for money or whatever through the credit card company. So I will at times end up with one month where it is a lot higher.

That is the way I like to use my credit card now that I have that luxury.


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RE: Keeping high credit rating without debt

Our daughter is at home with young children. Her husband is a high school VP. The only debt they have is a small mortgage. They also have a credit card in her name which is paid off monthly.

Recently they needed to obtain a loan to cover part of their new car until the old one was sold. They discovered that after years of no debt and prompt bill payment, he doesn't have a credit rating. All the bills are in her name. She has an excellent rating, but no income. He has an excellent income, but no rating. Finally he was able to covince the teacher's credit union to give him a loan, but it wasn't easy.


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RE: Keeping high credit rating without debt

At what point does getting too high of a limit become bad though.

Well, if you ever do seek credit for a larger purchase, you may find that some credit grantors will apply your credit limit, not your history of charges and payment, to the maximum you can borrow. Credit grantors will want to make sure those high limits and their loan to you will not exceed the maximum percentage of debt they think you can assume.


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RE: Keeping high credit rating without debt

I always wondered if it was bad to have too many cards or too high of a limit on two or more.

I know the last time I saw my report, there were cards on there that had been closed for years, still showing open.
Guess I need to take care of that.

A credit grantor assumes that one might go nutso and run them all up even though that is not what they have historically done...Right?


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RE: Keeping high credit rating without debt

sharon-sd - a very easy solution for your DD and SIL is for her to make her credit card joint with her DH (or any other forms of credit she has).

I was in a similar situation, except I had no credit history here. I'm from CAnada, had a great rating there, but the US does not look at foreign credit history, even from the wonderful neighbour to the north. I couldn't so much as get a dept store credit card with no history here and I had to have my husband make a bank account joint for me to be able to open a bank account after we were married.

Watching Suze Orman, she said to make the credit cards joint and that's what we did. We have three higher limit cards, all with zero balances. If it has a balance, we pay it off monthly. sometimes, if we had a large purchase we pay it off over two months so it doesn't hurt our savings.

At any rate, I just checked my credit score. Mine is 769 and dh's is 797. All his history was transferred to my credit rating at the three major agencies.

Also, a friend told me when I applied for a low limit mastercard from USAA (where my dh has belonged for eons), they asked me about my income. At the time I didn't have any and they declined me on the spot. Didn't even take an app. My friend who worked in banking told me that since AZ is a community property state, that dh's income is MY income too and I could have used his income to qualify for my own credit card. If your DD and SIL are in a community property state, then HIS income is qualified as HERs and she should be able to gain credit with his income and her credit rating.

At any rate, I have established a very good credit rating that some people take decades to get. This happened in a matter of months. The secret is for the one with the credit history to make them joint (not just as an authorized user on the account). The drawback, joint means both are on the hook, but it's important for your SIL to have credit history too to qualify for lower interest rates in case they want another mortgage.


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RE: Keeping high credit rating without debt

A credit grantor assumes that one might go nutso and run them all up even though that is not what they have historically done...Right?

Right. Grantors pay some attention to history through the credit score, but they're not unaware that you could go on some "retail therapy" binge and end up in the hole before you ever get to their payment.


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RE: Keeping high credit rating without debt

This is going back some years, but my folks ALWAYS paid for everything in cash. When they wanted to go to Europe, they appied for credit card. Could only qualify for AmEx to be paid off every month. They had no credit history whatsoever.

In order to have a 'credit history' you need to have something that you have applied for and pay off diligently. Even if you pay the cc off every month.

As a "married woman" in NC, those jerks tied everything to my husband. I bought a truck, talked someone into giving me a loan in my own name, and that was the start of my 'credit history'. Everyone should have one in their own name.,, much easier nowadays.

There are now lots of cc's in my name that I don't use at all, some have never been used at all. Two years ago when i bought my last truck, they said my number was 814. All is well in the world. I took out a $5K loan to get a $1K discount, paid it off in the three months, paying $15 for a $1K savings.

That's all I have to say about that.


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