Personal Finance

Good Credit: How It Really Works & What They Never Tell You

  • Last Updated:
  • Feb 21st, 2010 4:21 pm
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Deal Fanatic
Dec 11, 2008
9138 posts
978 upvotes
So wait, does this mean that if my credit limit on my credit cards is $10,000. I spend $1,000 each month. I should NOT make the full payment when it's due on the 15th each month. I should pay it after the due date and within 30 days of the due date???
Deal Addict
Dec 13, 2007
1489 posts
47 upvotes
Toronto
speedyforme wrote:
Jan 17th, 2010 5:36 pm
So wait, does this mean that if my credit limit on my credit cards is $10,000. I spend $1,000 each month. I should NOT make the full payment when it's due on the 15th each month. I should pay it after the due date and within 30 days of the due date???
Yes, of course -- if you love paying 18% APR on your purchases.
Deal Addict
May 31, 2007
4996 posts
2106 upvotes
speedyforme wrote:
Jan 17th, 2010 5:36 pm
So wait, does this mean that if my credit limit on my credit cards is $10,000. I spend $1,000 each month. I should NOT make the full payment when it's due on the 15th each month. I should pay it after the due date and within 30 days of the due date???
I wouldn't trust that or gamble with that. Apparently in hellfire's thread, if you miss the payment date on your Sears card, their computer immediately sends it equifax at like 12:01 AM. I have also read many comments regarding this same thing on the Sears card. I wouldn't take chances with that, pay your bills on time. Sell your assets if you can't.
Deal Addict
Dec 31, 2006
1297 posts
238 upvotes
I guess maxing out my line of credit for investing wasn't such a good idea :razz:
I am a friendly Koodo customer and AMEX customer.
Deal Addict
May 31, 2007
4996 posts
2106 upvotes
T3NSION wrote:
Jan 17th, 2010 7:40 pm
I guess maxing out my line of credit for investing wasn't such a good idea :razz:
What's not clear, is if their ratio is used for each individual credit product or all credit products added together.

For example, if you have 10k credit card maxed out, a 10k LOC empty and 10k HELOC empty, does this mean the "amounts owned" portion of the pie should only be filled up 33.33% ???
Deal Fanatic
Dec 11, 2008
9138 posts
978 upvotes
slavka012 wrote:
Jan 17th, 2010 6:50 pm
Yes, of course -- if you love paying 18% APR on your purchases.
That is why the article was so confusing. I never pay interest because it makes no sense to not pay in full before it's due. Anyway.
[OP]
Jr. Member
Oct 15, 2008
166 posts
3 upvotes
Vancouver
speedyforme wrote:
Jan 17th, 2010 5:36 pm
So wait, does this mean that if my credit limit on my credit cards is $10,000. I spend $1,000 each month. I should NOT make the full payment when it's due on the 15th each month. I should pay it after the due date and within 30 days of the due date???

That is why the article was so confusing. I never pay interest because it makes no sense to not pay in full before it's due. Anyway.
If you can you should pay the full amount by the due date so you don't incur any interests. The amount stated on the statement ($1000) is what is relayed to the credit agency even if you do pay the full amount by the due date. But if you pay the full amount before the statement is printed, then the amount relayed to the credit agency will be $0 so it's like you're not using the card.

In the article I was just trying to inform you that if you happen to be late it is okay as long as you pay before 30 days late.
Jungle wrote:
Jan 17th, 2010 7:18 pm
I wouldn't trust that or gamble with that. Apparently in hellfire's thread, if you miss the payment date on your Sears card, their computer immediately sends it equifax at like 12:01 AM. I have also read many comments regarding this same thing on the Sears card. I wouldn't take chances with that, pay your bills on time. Sell your assets if you can't.
That doesn't sound right. First delinquency rating is an R1, which means you have to be at least a month late. Sears cannot report anything to the agencies unless you're a month pass the due date.

Jungle wrote:
Jan 17th, 2010 8:04 pm
What's not clear, is if their ratio is used for each individual credit product or all credit products added together.

For example, if you have 10k credit card maxed out, a 10k LOC empty and 10k HELOC empty, does this mean the "amounts owned" portion of the pie should only be filled up 33.33% ???
All open credit facilities added together. 33% in your example.
Deal Addict
Dec 13, 2007
1489 posts
47 upvotes
Toronto
Now, correct me if I'm wrong....

If you have 10K total credit and that is not enough for you, you should not use all the 10K? Instead, use only about 3K, and then your score goes up. And so you'll be able to apply for another 5K, for a total of 15K, of which you'd want to use only about 5K?

That sounds totally perverse, stupid and backwards to me.
[OP]
Jr. Member
Oct 15, 2008
166 posts
3 upvotes
Vancouver
slavka012 wrote:
Jan 18th, 2010 9:51 am
Now, correct me if I'm wrong....

If you have 10K total credit and that is not enough for you, you should not use all the 10K? Instead, use only about 3K, and then your score goes up. And so you'll be able to apply for another 5K, for a total of 15K, of which you'd want to use only about 5K?

That sounds totally perverse, stupid and backwards to me.
Information is power. What you choose to do with it shows whether you're smart or stupid. In this case, well....it's your life.
Deal Fanatic
Dec 11, 2008
9138 posts
978 upvotes
Thanks for the tip, good to know I've been doing it right all along.

I think my CC limits total $15k altogether and I spend about average $2k a month on my statement.
[OP]
Jr. Member
Oct 15, 2008
166 posts
3 upvotes
Vancouver
rageguy wrote:
Jan 15th, 2010 10:41 pm
I've been reading a lot on these credit articles and I really appreciate them. One thing that I see throughout all the articles is that they all mention "debt" or "loan", as part of the credit calculation.

What if someone has 2 5 years old credit cards, $2500 limit each, no mortgage, no loans, no debt, lots in savings, and pays all credit card bills the moment it arrives? Doesn't that mean a perfect credit?
That means a spotless history but that person can have a higher credit score if the credit card(s) were utilized. So it's "perfect" but not best.
Deal Addict
User avatar
Dec 24, 2008
1326 posts
44 upvotes
Mississauga
My friend has a FICO score of 514, apparently due to late payments, although her FICO report says Late Payment 30/60/90 days for EVERY credit product she has, even though she can prove for certain she has not missed ANY payments on at least 3 of them. Once it's sorted out, how long will it take her, making all payments on time, for her score to reflect this? She's worried because she has to renew her mortgage in about 14 months and this is a terrible score. How can she fix the errors, and how long would this stay on her report for? What is the fastest way to increase a FICO score?

EDIT: I spoke to her again, and it turns out she misread the report and all her credit is paid as agreed with the exception of one she has been disputing with, which states 120 days late. She's decided to just pay the $100 and be done with it. Could her score be really low because she is at the top end of each credit card on what she owes i.e. available credit $6000, balance $5900 etc If she paid them down below 30%, could this raise her score to 650?
[OP]
Jr. Member
Oct 15, 2008
166 posts
3 upvotes
Vancouver
taylyn wrote:
Jan 19th, 2010 8:15 pm
My friend has a FICO score of 514, apparently due to late payments, although her FICO report says Late Payment 30/60/90 days for EVERY credit product she has, even though she can prove for certain she has not missed ANY payments on at least 3 of them. Once it's sorted out, how long will it take her, making all payments on time, for her score to reflect this? She's worried because she has to renew her mortgage in about 14 months and this is a terrible score. How can she fix the errors, and how long would this stay on her report for? What is the fastest way to increase a FICO score?

EDIT: I spoke to her again, and it turns out she misread the report and all her credit is paid as agreed with the exception of one she has been disputing with, which states 120 days late. She's decided to just pay the $100 and be done with it. Could her score be really low because she is at the top end of each credit card on what she owes i.e. available credit $6000, balance $5900 etc If she paid them down below 30%, could this raise her score to 650?
514 is a little lower than I'd expect from what you have described. Her credit is probably relatively new. If she can dispute it to the bank than that would help the best in terms of raising her credit score. If she can't dispute it then tell her to try and keep the balance below 80% and then 30%.

And tell her to read the article herself. It will help motivate her to keep her credit score high and her debts low.
Deal Addict
User avatar
Dec 24, 2008
1326 posts
44 upvotes
Mississauga
That's what we thought. She has a mortgage, a loan for a vehicle, 4 credit cards nearing the maximum, but all paid on time, at least the minimum, and a LOC nearing the maximum but always paid on time. She has had the cards anywhere from 2-5 years, LOC for one year, car loan for 2 1/2 years. There is one disputed charge but because the report says it's 120+ not paid, she's just going to pay it. Credit overall is pretty good, so we figure it's because she is near max on the credit cards and the 120 late payment one. All this and she gets a 514??? If she works at paying off the balance in the next year, no late payments, gets rid of that disputed balance, and the additional year of credit, is it possible to get the score up to 650+? We can't figure out what else she can do to raise the score before her mortgage renewal comes up next year...

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