Apparently I have NO CREDIT SCORE PT. II

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Elijahmex
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Apparently I have NO CREDIT SCORE PT. II

Postby Elijahmex » Sat Feb 14, 2015 11:42 am

Some of your might be familiar with my previous thread, some of you arent. If you are not aware of what my situation is here is a link to my first thread

http://creditcardforum.com/general-credit-card-talk/11349-apparently-i-have-no-credit-score.html

So I just moved back to NY from Switzerland last weekend. Headed to capital one on Monday and managed to open an account without even them checking for my credit history. They gave me a Capital One Platinum Debit MasterCard and my credit line was just activated, although the available credit is very low.

After opening the accound I immediately checked my credit score via credit karma and it is poor, nothing really surprising since I have no credit history.

So my questions today are, should I get other cards to build credit? How do I go about building credit the best way?

Mind you, I don't rely on credit much as I have sufficient liquid funds so I do not depend on credit at all.

If I do use credit, is it best to pay the bill in full or leave somewhat of a balance? To me it only makes sense to pay the full amount but I read somewhere that leaving a balance is a good thing...? :confused:

Excuse all my questions, I am very new to all this credit stuff. And thanks in advance for your answers & recommendations!

Cheers
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popamode72
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Postby popamode72 » Sat Feb 14, 2015 11:51 am

You can let a small balance report and then pay in full.
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)

Elijahmex
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Postby Elijahmex » Sat Feb 14, 2015 3:02 pm

popamode72 wrote:You can let a small balance report and then pay in full.


Indeed.

They told me the auto CLI happens after the 5th or 6th payment however I can ask for the CLI before that. After how much time should I ask for a CLI? after 3-4 payments?
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obxfisherman
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Postby obxfisherman » Sat Feb 14, 2015 3:02 pm

Something that confuses me from your post, you say you went to Capital One, however you state they gave you a Capital One Platinum Debit MasterCard, assuming you mean the Capital One Platinum, minus the word debt, Congratulations on securing that! Do you have any Hard Pulls (Inquiries) on your report besides Capital One? If not what is your income like? I recommend to build credit, any credit card from the Synchrony Bank Family, formally GECRB. These are store cards to stores such as amazon.com, walmart, mens warehouse, etc and yes they have a horrible interest rate, but it does assist you in building credit to obtain better cards. I have many in my card portfolio currently, however at some point I will close them. Regarding keeping a balance, yes you do want to keep a small balance on the card. Let's say you put $1,000 on the card in the month, you want to pay all that off throughout the month, but leave $100 or less on to register on your report, this looks good in the eyes of the credit score, but you don't want to keep a large balance if at all possible.
Cards Currently In My Wallet(See Avatar)
Chase Marriott Rewards Visa Signature (Daily Purchase): 13.4K
NFCU Visa SignatureCash Rewards: 5K
Sheetz Discount Card 3c Off PerGallon Of Gas Everyday

Total Credit Card Limits Roughly: 61.5K

popamode72
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Postby popamode72 » Sat Feb 14, 2015 4:06 pm

Elijahmex wrote:Indeed.

They told me the auto CLI happens after the 5th or 6th payment however I can ask for the CLI before that. After how much time should I ask for a CLI? after 3-4 payments?


If the card is part of their Credit Steps program, you'll get an auto CLI within six statements. Some people have reported that the CLI button can work even before that but I'm not sure. Lately they've become a lot more generous.

If you don't get a big CLI after six months, you can always contact the executive office and see if you can get another bump.
Macy's TLs (21k), Lowes (17k), CSP (10k), Sam's Club (10k), Nordstrom (5k), AARP (4.2k), Freedom (3k), Discover (1.5k), Quicksilver (2k), BoA (3k), Barclaycard Arrival (2.5k), Amazon Store (6k), Paypal (4.9k), Sam's Club MC (3.6k), Walmart MC (1.2k)

aquarius7373
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Postby aquarius7373 » Sat Feb 14, 2015 9:36 pm

My wife has poor credit so i got her the Discover It card. she was denied the card, but then offered the secured version. if your credit is that bad and you have liquid funds, i highly recommend. After that, Id go for the Barclays Reward card. its supposed to be easy to get and reports to all credit bureaus.

Also, the secured Discover It card doesnt report being secured to credit bureaus. it reports is as a regular credit card. just keep low utilization. i say pay in full. nothing has EVER shown me it's better to keep a low balance. just one study that shows the average user with 0% utilization has a much lower score than those with a 10%, but people with NO CREDIT also fit into that study falling in the 0% utilization category, skewing the results. I'm 25 with 0% utilization. never kept a balance. i have over 790 on all FICOs.

Try the Discover it. put $200 on it and use it once every other month or so (stay under $20/mo). Once your credit score is above 750 try to upgrade it. youll get your deposit back and get a real credit line.
[size=60]My Wallet - Primary Cards:
Amex Blue Cash Preferred (25k ~ 6% groceries)
Barclays Sallie Mae (6.3k ~ 5% gas and amazon)
Citi Double Cash Back (5k ~ 2% everything else)

My Wallet - Secondary Cards:
Chase Southwest Business (30k ~ AU)
BBT Visa (10k ~ because visa)
Home Depot Credit (10k)
Amazon Credit (6k)

Not Used:
Cap One Credit (2.15k)
Macy's Charge (1k)
Kohls Charge (1k)
JC Penny Charge (1k)
Macy's Credit (0.5k)

Future Cards:
Cap One Quicksilver Visa (1.5% everything to replace BBT visa)

TCL : $97,950
Credit History : 12 years - always PIF
FICO EQ : 797
FICO TU : 791

I'm a newbie - all advice is appreciated![/size]

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Vattené
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Clearing Up "The Balance Misconception"

Postby Vattené » Sun Feb 15, 2015 12:38 am

Carrying a balance with a credit card issuer is not the same thing as allowing a balance report to the CRAs for credit scoring purposes.

"Carrying a balance" when it comes to the credit card company refers to NOT paying off the previous statement in full and paying interest on the amount you didn't pay. ALWAYS pay at least what the credit card company says you owe when the statement comes in. This avoids interest charges.

Letting a balance report to the CRAs is where scoring benefits factor in. The credit card company will report what you owe each month, and typically this is the outstanding balance at the time the statement cuts. You see advice about letting a balance report becaue if they send a big fat zero to the CRAs it could look like you're not using the account.

Say you spend $900 in January and get your statement. During February you pay that but also spend $1,000. That $1,000 will be reported if you pay the January statement balance. You could pay the $900 January statement balance plus $900 before the statement cuts in February so the credit card company only reports $100. You're paying everything on the credit card in full, but you're also manipulating how much is reported to CRAs so the utilization is lower. This can be especially helpful if you're starting out with lower limit cards. Otherwise, even though you're paying in full it could appear on your credit report that your card is nearly maxed out just because you use it regularly.
-Vattené
FICO-8:
EX - 827 (4/17) | TU - 812 (4/17)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

aquarius7373
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Postby aquarius7373 » Sun Feb 15, 2015 8:31 am

Vattenè - Do you have links to anything that supports the "Leave a small amount on your card so it gets reported" idea? All morning I've been reading strategies for this, which all seem reasonable, but then there are people like me commenting saying they've never left a balance ever and credit scores are high. Or left $20 or so on a credit card for years each month, then began paying in full and his credit started increasing steadily for a year.

I understand the logic behind it. I just have been convinced it works that way. I'd like to know more about it.

Not sure how valuable this is, but BofA states to pay in full as well: (#4)
https://www.bankofamerica.com/credit-cards/education/5-facts-about-credit-cards.go
(I notice their answers are overly simplistic, anyway..)
[size=60]My Wallet - Primary Cards:

Amex Blue Cash Preferred (25k ~ 6% groceries)

Barclays Sallie Mae (6.3k ~ 5% gas and amazon)

Citi Double Cash Back (5k ~ 2% everything else)



My Wallet - Secondary Cards:

Chase Southwest Business (30k ~ AU)

BBT Visa (10k ~ because visa)

Home Depot Credit (10k)

Amazon Credit (6k)



Not Used:

Cap One Credit (2.15k)

Macy's Charge (1k)

Kohls Charge (1k)

JC Penny Charge (1k)

Macy's Credit (0.5k)



Future Cards:

Cap One Quicksilver Visa (1.5% everything to replace BBT visa)



TCL : $97,950

Credit History : 12 years - always PIF

FICO EQ : 797

FICO TU : 791



I'm a newbie - all advice is appreciated![/size]

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Vattené
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Clearing Up "The Balance Misconception" con't

Postby Vattené » Mon Feb 16, 2015 5:08 pm

**I'm thinking there may still be some confusion, but bear with me if I'm wrong.**

The advice in that link from BofA is still consistent with my example above. "Paying in full," at least as I've always understood and used it, means nothing more than paying whatever the last statement says is the outstanding balance within the grace period, which avoids interest charges.

In my example above, making one $900 payment the day you get the January statement, using the card regularly to build up $1,000 in charges, then paying that $1,000 balance off in March would constitute paying in full. The only reason to pay MORE than the last statement's balance is to manipulate the utilizatuon that gets reported. In my example, say the credit limit of the card is $1,500. Making that extra $900 payment into February's purchases would bring the utilization down from 66.7% to 6.7%. Making an extra $1,000 payment would result in 0% utilization.

If you would like a link, here is one from FICO that's often referenced. "Amounts Owed" is the relevant category. 66.7% makes for a high debt-to-credit ratio. General advice is 30% should be your maximum utilization and less than 10% is considered good, but I don't know if this comes from anywhere authoritative or if it's simply what many people have gleaned over time as a rule of thumb (FICO doesn't like to reveal much about it's scoring method and for good reason - it is a cash cow). Credit Karma explicity recommends a low, nonzero utilization, but to be fair that is according to their model. Perhaps it isn't as much of an issue in the FICO model, and perhaps others out there know better than I.

Many seem to conflate "letting a balance report" for credit scoring purposes with "carrying a balance." This isn't an issue with a card that sees regular use (meaning at least some purchase activity each billing cycle). You'll pay last statement's balance in full (therefore, by definition, you WON'T carry a balnce or pay interest) while letting the current cycle's purchases report to the CRAs.

When you say "leave a small amount on your card so it gets reported," to me that means pay off MOST of the statement balance, but don't quite pay in full so something gets reported. This simply won't be an issue if you use at least one of your credit cards at all in a given cycle. The only way nothing gets reported is either:
  • there is no purchasing activity for that cycle (you make no purchases and either pay off last month's balance or there was no balance last month to begin with)
    OR
  • You pay last cycle's balance but also make purchases this period and pay off those. In this case you have to pay the last statement plus any purchases before the next statement cutoff hits (and abstain from making any purchases a few days before the cutoff so nothing gets posted before you can pay it.) To return to my example one last time, this would mean paying the $900 statement balance plus the full $1,000 in purchases.

Personally, most of my cards report 0 balances because most of them are not used in any given billing cycle. I don't typically make extra payments too far beyond statement balances because I've gotten to the point where my credit limits are high enough that it isn't a concern. But if I were planning on applying for a mortgage soon? I'd make sure overall and all individual utilizations were under 10% just to be safe, even if it is the credit enthusiasts' equivalent of an old wive's tale. If my CLs were still in the quadruple digits, manipulating utilization would be a bigger concern.
**Sorry if I went into way more detail than you need. This does seem to be a topic of frequent confusion, however, so hopefully it will at least be of some value to others reading.**
-Vattené
FICO-8:
EX - 827 (4/17) | TU - 812 (4/17)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

takeshi
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Postby takeshi » Tue Feb 17, 2015 9:10 am

Elijahmex wrote:So my questions today are, should I get other cards to build credit? How do I go about building credit the best way?

General advice is at least 2-3 cards. If you have trouble qualifying you may want to look at the usual suggestions: secured and/or credit unions with more lax approval criteria.

Elijahmex wrote:If I do use credit, is it best to pay the bill in full or leave somewhat of a balance? To me it only makes sense to pay the full amount but I read somewhere that leaving a balance is a good thing...? :confused:

aquarius7373 wrote:Vattenè - Do you have links to anything that supports the "Leave a small amount on your card so it gets reported" idea?

As Vattenè has been pointing out it's "allow a small amount to report", not "carry a small amount" and there's an important distinction between the two. You can pay the statement balance in full (and therefore avoid paying interest) and have a balance report. It all depends on when you make the payment versus the card's report date. Most cards report on statement date but some do report at end of month, etc. Pay in full before the report date and no balance is reported (assuming no charges, fees, etc post). Pay the statement balance in full after the report date and the statement balance reports. If you want a small balance to report then adjust the balance prior to report date.

As for links, I'm not aware of any source that clearly spells this out. The companies that create scoring models really don't want the details of how their scoring models work disclosed. It seems to me that the "allow one balance to report at 10% or less" comes from testing and aggregated anecdotal evidence. You could certainly adjust your own reported utilization and see how your scores are affected to verify. Generally speaking the scoring models favor lower (but not 0) utilization and fewer balances.

I think Bob Wang has a chart showing aggregated effect of utilization on score and you can Google to find it.

aquarius7373 wrote:All morning I've been reading strategies for this, which all seem reasonable, but then there are people like me commenting saying they've never left a balance ever and credit scores are high.

Impact and how far one is willing to go will also vary. Standard advice is "one balance" for best score but I have balances on most of my cards and my scores are high. Could they be higher with fewer balances? Could my scores be higher with less than 12% utilization? Probably but I'm fine with them the way they are.



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