- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Question regarding high charges vs. credit limit on card
Posted on 8/23/14 at 3:46 pm
Posted on 8/23/14 at 3:46 pm
I have a personal credit card that I use to charge business related expenses, and a few personal expenses from time to time. Usually for personal expenses, I have a debit card, and I just use my phone and transfer cash to the debit card for my personal purchases. I'll open a card up at a store to save 10% off, but will then make the payment in full and cancel the card. I use my credit card at restaurants even when it isn't business related because I never let my debit card leave my sight or possession.
My credit score is good, 726, but it should be better. I just ran a credit and score report. I show my mortgage, a Home Depot card with a $10k limit and no balance, plus a Best Buy card with a $5k limit and no balance, and then I show 23 other credit cards that have been opened and closed, all cards like Sears, Kohl's, Macy's or something like that where they offered a big discount to sign up for their card. I have no car note, either.
We are considering purchasing a new home and want to squeeze out more points in our scores before we submit anything, so we can obtain the best rates. I'm wondering if how I handle my business transactions has been having a negative affect?
The card I use for business expenses is a Merrill Lynch Platinum Plus Cash Back Visa. My interest rate on the card is under 9% fixed, not variable, and I've had it for well over ten years. When the Great Recession hit, and all the banks were cancelling cards or raising interest rates high to get people to drop them, Merrill Lynch kept this card steady at like 8.89%. I have a $20,000 credit limit that I've had on there for the last eight years. I haven't asked to raise it. Most months I will charge between $10k-$17k on business expenses. My company reimburses me every week, and so I'm never behind on funds and I pay it off every month.
The question is, since I never have a balance except my current charges, is that a positive or a negative? Also, since every month I use between 50% - 85% of the available credit on that VISA, does that negatively affect my score?
Would I be better off adding one or two more cards (AmEx, Mastercard), then split the charges among those cards to keep a lower charge to credit ratio? Conversely, by adding the extra cards does that take my credit score down, negating the point of adding them in the first place?
My credit score is good, 726, but it should be better. I just ran a credit and score report. I show my mortgage, a Home Depot card with a $10k limit and no balance, plus a Best Buy card with a $5k limit and no balance, and then I show 23 other credit cards that have been opened and closed, all cards like Sears, Kohl's, Macy's or something like that where they offered a big discount to sign up for their card. I have no car note, either.
We are considering purchasing a new home and want to squeeze out more points in our scores before we submit anything, so we can obtain the best rates. I'm wondering if how I handle my business transactions has been having a negative affect?
The card I use for business expenses is a Merrill Lynch Platinum Plus Cash Back Visa. My interest rate on the card is under 9% fixed, not variable, and I've had it for well over ten years. When the Great Recession hit, and all the banks were cancelling cards or raising interest rates high to get people to drop them, Merrill Lynch kept this card steady at like 8.89%. I have a $20,000 credit limit that I've had on there for the last eight years. I haven't asked to raise it. Most months I will charge between $10k-$17k on business expenses. My company reimburses me every week, and so I'm never behind on funds and I pay it off every month.
The question is, since I never have a balance except my current charges, is that a positive or a negative? Also, since every month I use between 50% - 85% of the available credit on that VISA, does that negatively affect my score?
Would I be better off adding one or two more cards (AmEx, Mastercard), then split the charges among those cards to keep a lower charge to credit ratio? Conversely, by adding the extra cards does that take my credit score down, negating the point of adding them in the first place?
3
Posted on 8/23/14 at 3:54 pm to HubbaBubba
What is your average age of accounts? I believe closed cards still contribute to this, so it might be hurting your score. Also if you have multiple inquiries in past year.
As for the credit ratios, what is reported is statement balance. Most people recommend a ~10% ratio of credit utilization (again, based on statement balance).
I assume the card you use often shows up on your report since it's personal and not through your company. Does that high utilization get reflected on the statement, or do you pay it off before that?
To keep my utilization lower, I pay off my balance about a week before the statement date. I get charged 0 interest, and a low balance gets reported to credit bureaus.
Ran my score on Thursday. 815 at age 28.
As for the credit ratios, what is reported is statement balance. Most people recommend a ~10% ratio of credit utilization (again, based on statement balance).
I assume the card you use often shows up on your report since it's personal and not through your company. Does that high utilization get reflected on the statement, or do you pay it off before that?
To keep my utilization lower, I pay off my balance about a week before the statement date. I get charged 0 interest, and a low balance gets reported to credit bureaus.
Ran my score on Thursday. 815 at age 28.
Posted on 8/23/14 at 4:07 pm to LSUtigerME
In the last year, I opened one card at a jewelry store to buy something for my wife where they were offering a special discount to use their credit. They gave me an $8k limit and I only used $1700, then waited ten days, got the account info, paid it all over the phone and cancelled the account.
Other than that, I just don't use credit cards. I used to have another Visa card from American Airlines (Citi), but Citi got weird after the bank troubles in 2008 and tried to raise rates on me for no good reason and so I cancelled them. I got a VISA card with $1500 in credit from BOA for opening a checking account and cancelled that after sitting on it for three years without using it. That's pretty much it.
I have one and only one ding on my credit in the last 30+ years, and that was a $40 charge that an a-hole medical facility sent to collection while I was disputing the charge, and they refused to remove it, and the collection agency turned it in to the credit agencies. That was six years ago and I'm still pissed about it.
So other than that, I'm wondering if my use of the credit card the way I do affects things? I mean, it shows a high balance right now of nearly $17k, but I've received all but $5k from my company of that and will pay it next week before the due date. This is what I do every month.
Other than that, I just don't use credit cards. I used to have another Visa card from American Airlines (Citi), but Citi got weird after the bank troubles in 2008 and tried to raise rates on me for no good reason and so I cancelled them. I got a VISA card with $1500 in credit from BOA for opening a checking account and cancelled that after sitting on it for three years without using it. That's pretty much it.
I have one and only one ding on my credit in the last 30+ years, and that was a $40 charge that an a-hole medical facility sent to collection while I was disputing the charge, and they refused to remove it, and the collection agency turned it in to the credit agencies. That was six years ago and I'm still pissed about it.
So other than that, I'm wondering if my use of the credit card the way I do affects things? I mean, it shows a high balance right now of nearly $17k, but I've received all but $5k from my company of that and will pay it next week before the due date. This is what I do every month.
Posted on 8/23/14 at 4:11 pm to LSUtigerME
quote:That is an interesting concept. I always pay a few days before the due date, but have not done so before the statement date. Interesting.
To keep my utilization lower, I pay off my balance about a week before the statement date. I get charged 0 interest, and a low balance gets reported to credit bureaus.
Posted on 8/23/14 at 4:18 pm to HubbaBubba
quote:
got the account info, paid it all over the phone and cancelled the account.
Doing that as many times as you have is what it keeping you score down IMO
This post was edited on 8/23/14 at 4:19 pm
Posted on 8/23/14 at 5:14 pm to BACONisMEATcandy
Yeah. I'll bet his AAoA sucks. Plus having only three cards and two of them are store cards.
Posted on 8/23/14 at 9:49 pm to HubbaBubba
Get a business card, like the Chase Ink. That balance doesn't count against your personal ratio, so it's a great way to protect your score from spending fluctuations.
Also, stop opening cards just to get a discount. That's a rookie mistake and is costing you a substantial number of points.
Also, stop opening cards just to get a discount. That's a rookie mistake and is costing you a substantial number of points.
Posted on 8/23/14 at 10:28 pm to VABuckeye
What is AAoA?
Seems like it's some sort of game to accrue points. I have three cars, all paid for. I'm on track to hit my first million in assets and investments by this time next year. No furniture notes, nothing.
So, strategy moving forward is to add more credit cards, spread my charges among them, pay them each month before the balance hits the statement, and stop adding credit cards for discounts and cancelling them.
Anything else?
Seems like it's some sort of game to accrue points. I have three cars, all paid for. I'm on track to hit my first million in assets and investments by this time next year. No furniture notes, nothing.
So, strategy moving forward is to add more credit cards, spread my charges among them, pay them each month before the balance hits the statement, and stop adding credit cards for discounts and cancelling them.
Anything else?
Posted on 8/23/14 at 10:58 pm to HubbaBubba
Average age of accounts. And yes, other than spreading the charges around. That doesn't much matter. Also, your credit score doesn't care about your assets.
Posted on 8/25/14 at 2:38 pm to Joshjrn
One of the great tools is having an Amex account that has age. So anytime you open a new account with Amex it gets backdated to your original membership date. They are one of the only companies that does this.
AAOA is average age of accounts. New accounts bring that down. If you have one 10 year old account and you open a brand new one it cuts your age in half. If you have 5 accounts open for 10 years and open a single new one it won't have much affect.
People who avoid credit are penalized by these things once they need credit.
Also utilization is easiest to understand as the ratio between balance on each account the day the statement cuts and the total credit line. If you have an accounts that is regularly going to cut with a high amount you need to offset by having a few other high limit accounts that don't.
Of course I'm not going to charge $100,000 on my credit cards in a month, but if I want to leave 10 grand on a 0% deal for a while or charge $10,000 a month in business expenses it still only shows that I use 10% of what I have available instead of being maxed out every month. Once you learn how the game works its pretty simple.
AAOA is average age of accounts. New accounts bring that down. If you have one 10 year old account and you open a brand new one it cuts your age in half. If you have 5 accounts open for 10 years and open a single new one it won't have much affect.
People who avoid credit are penalized by these things once they need credit.
Also utilization is easiest to understand as the ratio between balance on each account the day the statement cuts and the total credit line. If you have an accounts that is regularly going to cut with a high amount you need to offset by having a few other high limit accounts that don't.
Of course I'm not going to charge $100,000 on my credit cards in a month, but if I want to leave 10 grand on a 0% deal for a while or charge $10,000 a month in business expenses it still only shows that I use 10% of what I have available instead of being maxed out every month. Once you learn how the game works its pretty simple.
Posted on 8/25/14 at 3:26 pm to tes fou
quote:
tes fou
Solid advice
Posted on 8/25/14 at 8:51 pm to BACONisMEATcandy
Thanks all!
Posted on 8/26/14 at 2:25 pm to HubbaBubba
The numerous account openings and closings will impact your score as your AAoA is likely low. I recommend a business credit card for your general business expenses. Always a good rule of thumb to keep those expenses seperate anyway.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News