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Started by WengerTodd, December 17, 2019, 06:03:46 AM
Quote from: Kendall on December 17, 2019, 09:18:41 AMRegarding the FICO score, I had a similar situation. My score was 850 and I felt an intense drive to keep it there. Pride and stuff :-)I am not working and I live off my investments and the income of my partner. Then last year we decided to buy a vacation property together and my credit score dipped to 750. I admit it, that hurt a little bit. After some thumb-sucking and gnashing of teeth I decided that I should not let the FICO score tail wag the dog. I had several credit cards from the wild and crazy 2000's when I was rolling my HELOC between 0% balance transfers on cc's. I found that after a few years of inactivity, the cards were no longer issued and accounts closed automatically. Maybe that is not happening anymore?
Quote from: Leigh on December 19, 2019, 05:45:10 AMGood morning!Just keep these things in mind:35% of your FICO credit score is from paying your debts on time.30% is your debt to credit ratio. How much of your available credit are you actually utilizing.15% is the age of your lines of credit.10% is the variety of credit lines10% is how many inquiriesIf you reduce your lines of credit, you will essentially raise your debt to credit ratio. I am assuming you understand what this means, but for the peanut gallery who may be reading this, I'll explain.If you have six cards with a combined available credit of $12,000, and you charge $3000 on those cards every month, you are utilizing 25% of your available credit. This is acceptable. (anything over around 30% is frowned upon) by FICO and vantagescore says the lower the better and the percentage utilized is 'highly influencial'.If, however, you reduce your cards to two, with a combined credit limit of $4000 and you charge $3000 every month, you are now utilizing 75% of your available credit and your credit score is going to go down.yes, keeping an older line of credit is important but do what you have to do. I recommend my clients evaluate their cards every few years and see what is working best for them. Personally, I keep a high cash back card, a quarterly bonus cash back card, a premium travel card for travel benefits and one premium card that as of yet, I haven't seen another card to match the goodies it offers.I pay off every card each month and charge every single thing I can. It's all about budgeting.Good for you though, that you use cards responsibly, and understand their impact to your score.
Quote from: WengerTodd on December 19, 2019, 07:35:10 PMI really appreciate you posting those percentages, that is really important for me because it'll help me understand better how I'm affected by various decisions. Unfortunately for me, my investing and fiscal education was slow and picked up in tidbits over the past ~20 years. The positive is that I largely took responsibility as I inferred it from my dad growing up. But there was no "ah hah" moment for me, just picked things up as the interest in the topic hit me. Not to beat this horse, but since I'm here I might as well lay out (somewhat fictitiously) my plan moving forward.Here are the current cards I have:Bank / Origination Date / Credit Limit / Additional InfoSuperFancy Bank - 5/30/2011 - $32,500 - Primary Card [KEEP]Oregon Trail Bank - 4/3/2009 - $16,500 - Second Most used (but rare) [KEEP]Bank of Afghanistan - 5/12/2005 - $13,000 - Third Most used (rarely) [KEEP]Jim-Bob's Bank - 6/12/2006 - $8,450 - Never Use [ELIMINATE]British Leyland Card - 6/28/2001 - $6,550 - I REALLY want to get rid of this card, but it has the oldest inception date. ***Hechingers Hardware - 7/19/2017 - $23,700 - Really don't want this card, but thinking I should keep since it adds to my credit [KEEP]1 - So what's clear to me, I can definitely get rid of Jim-Bob's Bank card, with the second lowest credit limit, and the fact that I never use it, it really serves no point in me even keeping it. So I'm going to axe that one.2 - Hechingers Hardware, I'd really like to get rid of this one, I don't think I'll ever use it again, but I may decide to just keep it because it adds so much to my total credit amount. So I'll probably keep it. It may come in handy with a future home I own, plus I own stock in Hechingers (lol).3 - British Leyland Card, I feel obligated to keep this one because it's my oldest credit history, almost 19 years now. I never use this car, and there are absolutely no benefits to it that I have any interest in. So what I'm going to do is call the company, and just be honest with them that I don't plan on using it anymore. If they can "convert" the card to another kind, which will allow me to keep the age of the card, and make up for the loss of credit amount from card #1 I'm getting rid of, then that will work. If it really comes down to it, I may just do what Kendall says and just axe it too... I don't want the hassle, and their website is totally ridiculous. Matter of fact, every time I log in to check, it pretty much asks me to create a new password because the site sucks so bad. I have a $0.50 credit, hahah... and I haven't used it in 5 months. Last couple of questions (again, I really appreciate everyone giving me advice)...- Is having $100k of available credit important in calculating debt to credit ratio when you have ~$450k in mortgage debt? Or are the two totally unrelated? I don't have any credit card debt, and sometimes I make multiple payments a month just to keep the balance at $0.- Does anyone know of a credit card that allows you to pay down mortgage interest that is non-specific to one mortgage company?- What is the difference between FICO 8 and FICO 9? My FICO 8 is 850, but FICO 9 seems to fluctuate wildly with no obvious reason. Like, I dropped 21 points one period without any obvious indications as to why... I still had a credit utilization of 0 or 1%... and none of the other factors?Thanks again!
Quote from: Leigh on December 20, 2019, 05:20:03 AMFinancial Literacy is a life-long learning process because financial literacy keeps changing. Bitcoins debit cards, charging everything....these things were the norm or even known when I was young. We paid cash for everything and credit was hollering out to the pharmacist, "Put it on Mama & Daddy's account" when you picked up a prescription. Just keep learning and most importantly, learning and understanding your own credit reports and spending habits.SO...onto your quesions. Honestly, I would suggest playing around on credit karma to see how your score might change as you close cards. I think if you have your accounts frozen (AS YOU SHOULD) you may not be able to do this, but it might be worth a thaw to see how it would play out.(can I just take a moment to rant about how INEPT Experian's website AND contact line is when trying to modify a thaw??? )Okay. So the thing is, you need to do what you need to do. Close the cards you don't want and then pay your bills on time afterwards. Your score will be affected but for only a few months. If you aren't applying for a line of credit (or new auto insurance) it should not matter. After a few months, it will right itself.Keep notes of this cancellation on file and double check your credit reports on transunion, experian, equifax to ensure it was closed as you requested.Your debt to credit ration and debt to income ratio are two different financial animals but they do matter when you apply for a line of credit. The lender does need to know if you are a credit risk and if you can handle the payment. But debt to income ratio is not affecting your credit score. Your ontime payments of your mortgage ARE however.I don't know anything about your credit card home mortgage interest payment question. If you go to MyFico you can read all about fico scores. Lordy, it's like a car lot! So many versions! Apparently Fico 9 is their latest and greatest, and third-party collections that have been paid off won't negatively affect the score, medical debt is treated differently, and rental history, when reported, factors into the score.