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Started By
Message
Credit Question
Posted on 2/9/11 at 8:46 am
Posted on 2/9/11 at 8:46 am
I have 1 credit card - $1000 limit. I just got a new car and financed $4000 of it. Will this screw up my credit score (since my debt to credit ratio will be so high)?
Im in my early 20's and am trying to secure good credit (currently about 740). I am new to this and any help is great.
Is the debt to credit ratio just for credit cards or does it include debt from loans? I have 0 debt on credit cards.
ETA: I have the cash to go pay it off. I didn't becuase that would take a huge chunck out of my cash on hand. But, if it is in my best interest to pay it off i can.
Im in my early 20's and am trying to secure good credit (currently about 740). I am new to this and any help is great.
Is the debt to credit ratio just for credit cards or does it include debt from loans? I have 0 debt on credit cards.
ETA: I have the cash to go pay it off. I didn't becuase that would take a huge chunck out of my cash on hand. But, if it is in my best interest to pay it off i can.
This post was edited on 2/9/11 at 9:03 am
3
Posted on 2/9/11 at 9:10 am to MikeJackon428
If you always pay your bills on time and do the right thing, you may still wind up getting dicked over. FICO sucks. frick it.
Previous Money Rant
Seriously, I wouldn't worry about the impact of this on your credit score unless you're about to make another major purchase. d/c ratio might bring you down some, but I wouldn't worry.
If it'll make you feel better, simply call your credit card company and raise your limit. Or sign up for a bunch of new cards and don't use them.
Previous Money Rant
Seriously, I wouldn't worry about the impact of this on your credit score unless you're about to make another major purchase. d/c ratio might bring you down some, but I wouldn't worry.
If it'll make you feel better, simply call your credit card company and raise your limit. Or sign up for a bunch of new cards and don't use them.
Posted on 2/9/11 at 9:42 am to MikeJackon428
You will probably be helping your credit by taking out that loan. The FICO in itself is a shitty way to measure someones risk level.
Fico scores consist on some unknown formula that takes into consideration
debt to credit limit
any missed payments
and how long a specific account is open
If you have netflix you should watch the documentary "MAXED OUT"
It is gives great insight to the topic.
Fico scores consist on some unknown formula that takes into consideration
debt to credit limit
any missed payments
and how long a specific account is open
If you have netflix you should watch the documentary "MAXED OUT"
It is gives great insight to the topic.
Posted on 2/9/11 at 10:48 am to I Love Bama
quote:
Or sign up for a bunch of new cards and don't use them.
Don't do this. Your credit would get checked too many times. It lowers the score.
Get an AMEX credit card and pay it off each month and get points for something while doing it.
Posted on 2/9/11 at 10:59 am to MikeJackon428
Don't worry about this overly much. The only way to really seriously ding your score is to be late on payments, file for bankruptcy, that sort of thing.
Having a high balance relative to your total credit available is a ding, but not a huge one.
As others have pointed out, in the long run it may help your score to finance your car. Your credit score generally increases not only when you borrow (and pay off according to the terms) but also by the type of account. All things being equal you are better off with both revolving and installment credit rather than borrowing the same amount of just one type.
Finally, as someone else already mentioned, with a 740 score you should just be able to pick up the phone and ask for an increase, then just not use it.
Having a high balance relative to your total credit available is a ding, but not a huge one.
As others have pointed out, in the long run it may help your score to finance your car. Your credit score generally increases not only when you borrow (and pay off according to the terms) but also by the type of account. All things being equal you are better off with both revolving and installment credit rather than borrowing the same amount of just one type.
Finally, as someone else already mentioned, with a 740 score you should just be able to pick up the phone and ask for an increase, then just not use it.
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