There are a lot of misconceptions about how credit scores are calculated. When I explain to people that I have 20+ credit cards open at a given time, the first question I’m usually asked is ”doesn’t that ruin your credit score?!”
Continue reading: What’s My Credit Score? Excellent, Despite Lots Of Cards… Here’s Why
Share your questions, experiences, and thoughts below.
Does Amex report a credit card utilization percentage? The cards don't have an advertised credit limit.
@ HejBjarne -- Nope, if there's no advertised credit limit (like on Amex hybrid cards), then utilization isn't reported.
In regards to utilization, I have found that paying my balance before the statement closed and having a zero to very small balance consistently was hurting my credit score as it looked like I never used the card.
The moment I started leaving a couple thousand on my balance each month and then paid it off immediately after the statement closed my CC score was finally able to break past a wall. That wall being 835 for me. Prior to that it just hovered in the 825-835 area. The banks need to see you actually using your CCs. A balance of zero to them is basically not using your credit and they want to see you use it. This is under the assumption you keep it under 10 percent of utilization as well. They just need to know you can handle using and paying a CC.
"35% of your credit score is made up of your payment history. That couldn’t be easier. Just pay your bills on-time, and you’ll basically get “perfect marks” for a third of your credit score"
Thats the hard part for Americans!
In the UK, ClearScore offers a free App, which utilises the Equifax database. Experian, is also available via a free App too. I utilise both from time to time.
The holder of only two Credit Cards and one who pays off my balances as I go, my maximum available credit score has never suffered because of my preferred method of use.
Hi Ben. Doesnt having no loan debt also hurt? I'm talking car loans, personal loans, etc. I don't have any of those and my credit reports ding me for not having any of that kind of debt. Not a big deal, but wanted to ask the expert.
Auto pay is your best friend a high credit score. Add pay full balance every month and that keeps you solid credit score wise at zero interest
I'm impressed C1 will approve you... those of us with 30+ cards, LOL/24, etc. cannot seem to get far with them. My only hope for a C1 lounge is SQ in J at JFK T4 these days.
The average American cares about their credit score entirely too much. Honestly, if you aren't buying real estate or a vehicle year after year, it means very little. Not saying you should have bad credit but anything above 650 if you aren't doing activities I mentioned above, is just fine.
The average American is also over leveraged.
1990 …. the more you post and boast, the more convinced one becomes that you are actually Ben, pretending to be a
Joe Soap guest.
Credit score affects home and car insurance too. But yes if you dont already own home/car and are not looking to buy then not an immediate concern.
I keep a credit balance of $5 on the cards I do not use but want to keep for history. They mail the $5 back after six months and then I pay them again. You have to pay it through your bank bill pay.
According to some sources, the average U.S. citizen carries about of $60,000 of debt. With the average household carrying about $105k.
By comparison the average UK citizen only carries £35k, or about, $47.5k.
I find it interesting to compare such facts and appreciate that Ben, has provided me with the impetus to enquire further …. as I have said before …. “Every day is a school day”.
As I cannot understand the thinking behind such an action, would you care to elaborate Cbchicago?
This is why citi has repeatedly denied me any card for over a year. I have a 830+ score, more than adequate income, not too high of a credit limit across 5 cards (about 70k total credit limit), low utilization, and I always pay on time, usually well before the due date... And that's the problem, according to them. I haven't even been able to get a basic miles card from citi because of this.
I wish; Ben clearly has an 'in' with these issuers that I clearly do not.
On current events, is the UK getting any snow this season? It's nearly 9AM in NYC, and we're getting a healthy amount so far. Supposed to really pick up this afternoon.
It definitely hurts if you don’t have a CC or some kind of open credit line or loan. My father I has lots of assets and a very high net worth. My mother ran their business and also the CCs, loans, etc are in her name, partially for liability protection. Over 30 years, my father’s credit slowly slipped as he never used it. They retire, and he tries to buy a car. He as ample assets and can buy any car cash. He has to finance to get the best deal on the car. They wouldn’t approve him. My mom had to go in and finance the car and pay it off.
I immediately started opening CCs to my wife to prevent that from happening as I noticed her credit was slowly slipping as well due to lack of loans or credit usage. It’s now rebounded and doing very well.
1990/BS, too many slip up, too many coincidental trips, too much knowledge and the like, all point to: 2+2=4!
Trust me you cannot kid a kidder, too much like DDT, for pure coincidence.
The C1 VX was easy to get approved for when it was released. That’s when I got it too despite many cards wich low balances. C1 wanted to expand their customer base. I don’t expect any special relationship was needed for Ben at that time.
Most Americans hear having 20 credit cards as having 20 maxed out credit cards.
Here is what I find comical. Sometimes I make large purchases for example I make estimated tax payments with my credit card. Since the moment the statement closes, the amount shows as "unpaid debt" - and I only pay at the due date - sometimes my credit scores goes down 30-40 points. Only to then recover again once I pay the balance at the due date. I always pay at the due date and have done so all my life. Yet the credit agencies suddenly see me as a big risk! The fact that your balance counts against you even before it is due makes no sense.
I know some folks pay the balance before the due date to avoid that, but that's also plain silly to have to pay something before it is due just to avoid this. As an example, let's say I pay 50k in taxes with my credit card, if I make the purchase towards the beginning of my billing cycle, I get almost 2 months of interest free "loans" while I keep my real.money invested or at least get 3-4% in a savings account. That's about $300 I get in interest for 2 months at 3.5%. Not a huge sum but worth it to me.
Ben - do you ever get declined for cards? I also have excellent credit, but suspect too many new accounts/queries results in my being rejected sometimes. Thanks!
InternationalTraveler, then I'm happy for you, Ben, and the others, but, unfortunately, I was not as lucky. Will need to wait for 0/24 to try again, it seems.
If you are paying your cards off before the end of the month, don't some issuers not report any utilisation, because they treat it as the card not being used at all?
It keeps the account open. Most credit cards will close your account if there is no activity. Keeping the account with a credit of $5 prevents this type of action. I have one store credit card that I have keeped open for 20 years with this practice.
I was denied a Citi Globe due to having “too low credit utilization”. I have an excellent credit score otherwise and I’m rarely denied.
I do not think you benefit much from paying off your credit cards before the statement closes. In fact depending on how much money you spent, it may be useful to have the extra few weeks. Perhaps your credit score may differ by a few points.