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Message
re: Paying off a credit card too soon?
Posted on 2/26/14 at 2:37 pm to iAmBatman
Posted on 2/26/14 at 2:37 pm to iAmBatman
quote:
Debt level is 30%
The amount of debt you have in comparison to your credit limits is known as credit utilization. The higher your credit utilization – the closer you are to your limits – the lower your credit score will be. Keep your credit card balances at about 30% of your credit limit or less.
I don't where he got 10%, but he might have been pointing towards utilization optimization as opposed to the obvious red flag rate of 30%.
The 30% is a red flag to creditors, but I've read a good deal on the subject for optimizing looking at percentages over 0%, but obviously way less than 30. But to be fair, I don't think the average person should worry too much about the most optimized utilization rate to begin with.
Its amazing to me how scared/uninformed of credit people are.
This post was edited on 2/26/14 at 2:38 pm
4
Posted on 2/26/14 at 2:39 pm to Teddy Ruxpin
I agree...anything less than 30% utilization of TOTAL credit limit is fine. Once you start getting into the mid and upper 700s, there really is no benefit to increasing your credit score.
Posted on 2/26/14 at 2:45 pm to Teddy Ruxpin
0-2% utilization, always pay off balance at the end of the month and my fico score is 847
Posted on 2/26/14 at 2:52 pm to Tiger in Austin
quote:
0-2% utilization, always pay off balance at the end of the month and my fico score is 847
Whoa that's a nice score. I'd abuse the hell out of that score before I ever reached 847. For positive uses of course.
This post was edited on 2/26/14 at 2:54 pm
Posted on 2/26/14 at 3:00 pm to Teddy Ruxpin
was higher but lost 1 point when i sign up for Sapphire Prefer to get the bonus 
Posted on 2/26/14 at 3:07 pm to Tiger in Austin
quote:
was higher but lost 1 point when i sign up for Sapphire Prefer to get the bonus
At least you did something with that pristine score. No point of having it without benefiting from it, but that is great. 
Posted on 2/26/14 at 5:43 pm to Will Cover
quote:
What’s the opposite of wealth? Debt, of course.
Ummm ... no.
Wealth is basically net value. In account terms, it would be "owner's equity". Debt is "liabilities". Two completely different things that need no impact each other at all.
Debt that is used to pay for assets that don't have a higher rate of return will reduce your wealth, but that is not the same thing.
quote:
So if you want to be wealthy, getting into debt is not going to get you there.
Using other people's money *correctly* is a great way to get wealthy.
Posted on 2/26/14 at 5:48 pm to Modern
If you have a 0% APR then you have no financial reason to pay it off early. It might help your credit score if your ratio of credit used to total credit available is high, but unless you're planning to apply for a loan soon that really doesn't matter.
Posted on 2/26/14 at 8:43 pm to Will Cover
quote:Same here. I got an additional $1,300 off plus no tax when I asked what the cash price was. About a 20% savings on the total purchase
You'd be surprised at how much of a better deal I have been able to get at my local jewelry store because I pay in cash. I'm talking thousands.
This post was edited on 2/26/14 at 8:44 pm
Posted on 2/26/14 at 9:49 pm to foshizzle
quote:
Using other people's money *correctly* is a great way to get wealthy.
The key word is correctly. Most people don't. There's a reason why the banks operate in a tall rise building with multiple locations and why most people only live in a one story house.
This post was edited on 2/26/14 at 9:50 pm
Posted on 2/26/14 at 10:09 pm to Teddy Ruxpin
quote:
I don't where he got 10%, but he might have been pointing towards utilization optimization as opposed to the obvious red flag rate of 30%.
Most experts on the matter will tell you that you should keep a ZERO balance on all your cards except ONE; and that you should keep utilization on that ONE card at less than 10%. I've been tracking my FICO score through MyFico.com's ScoreWatch for 2 years and I can tell you that I get a VERY big hit when my utilization is at 30% as opposed to less than 10%. Here is just one graph I pulled from googling the matter but all research points to this being the case with all revolving debt.
Posted on 2/26/14 at 10:31 pm to JonTheTigerFan
I wasn't arguing your point, I just thought it was confusing two points. One being a negative on your report (30%) and another that is optimizing (10%) your score. Those two are highly related but separate points, but I'm glad you shared the graph.
I've even seen it argued that the sweet spot is 2 to 4% but I don't care enough to shootfor that.
I've even seen it argued that the sweet spot is 2 to 4% but I don't care enough to shootfor that.
This post was edited on 2/26/14 at 10:33 pm
Posted on 2/26/14 at 10:36 pm to Teddy Ruxpin
quote:
I've even seen it argued that the sweet spot is 2 to 4% but I don't care enough to shootfor that.
Yeah, screw that. I don't even care what mine is unless I'm going to app for credit. Then I will pay down cards and watch my FICO score until I get the highest score I can.
Posted on 2/27/14 at 12:30 am to Teddy Ruxpin
quote:
I don't where he got 10%, but he might have been pointing towards utilization optimization as opposed to the obvious red flag rate of 30%.
10% isn't a concrete number, but this.
It is a sweet spot in terms of score.
You'll have a higher score than having zero utilization, but if you go much higher than that it will incrementally be detrimental to your score.
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