The Score

Off Topic
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Question, AC. I’m currently on a secured credit card with Bank of America. I got an offer from Capital One/Master Card for an actual credit card that isn’t secured. There is a 1% cash back reward. I’m thinking it’s a step up from having a secured card that’s already cost a little over $40 in annual fees and gives me no rewards. This is my first credit card offer.

My wife thinks that applying is a bad idea as opening and closing credit card accounts doesn’t look good and will damage my credit. I somewhat agree but if I plan on accumulating accounts as the offers get better, but only use the one with the better offer and maybe closing the lesser accounts at a later date, how will that affect my credit?

Note: We always have the cash to pay for our credit card bills as we have a budget and stick to it whether spending in cash or credit.

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[quote]postholedigger wrote:
Question, AC. I’m currently on a secured credit card with Bank of America. I got an offer from Capital One/Master Card for an actual credit card that isn’t secured. There is a 1% cash back reward. I’m thinking it’s a step up from having a secured card that’s already cost a little over $40 in annual fees and gives me no rewards. This is my first credit card offer.

My wife thinks that applying is a bad idea as opening and closing credit card accounts doesn’t look good and will damage my credit. I somewhat agree but if I plan on accumulating accounts as the offers get better, but only use the one with the better offer and maybe closing the lesser accounts at a later date, how will that affect my credit?

Note: We always have the cash to pay for our credit card bills as we have a budget and stick to it whether spending in cash or credit.[/quote]

I would apply for the card. Don’t close the BOA account yet, but start using the new one more often and paying it off completely each month. You will probably have a relatively low credit limit at first, that is fine - you can call them in six months or a year of good payment history and ask them to raise the limit. For a completely new account, it usually takes 3 to 6 months before it starts affecting your score, so you should NOT close the other secured account right away.

I think the strategy of accumulating accounts and closing others as the offers get better is a bit flawed in the long term. First of all, you should be paying off your credit card completely each month. As long as you do that, you will pay NO interest, so the interest rate really shouldn’t matter all that much to you.

Second, the longer you have a tradeline open the more of a positive impact it has on your score. If you become an “introductory APR whore”, constantly jumping from card to card and changing shit around all the time you will not reach your credit potential. The algorithm rewards stability and positive history. The longer you have the account, the more positive impact it will have on your score.

But don’t have TOO many accounts that you don’t ever use. You should try and use each card you have at least once every month or two - even for just a small purchase, and pay the whole thing off. If you just start racking up new accounts, but don’t use the credit extended to you, then you will start to get hit with “too much available credit”. LOL

I think a reasonable goal to shoot for (for REVOLVING accounts) is to have three to five quality credit cards (AmEx, VISA, MC, Discover) and to develop those accounts. VISA is the most widely accepted card on the planet. Call every year and ask for the balance to be raised. If you get an low APR offer in the mail, call each of your cards and tell them you have this offer and will they lower your interest rate. Sometimes they will.

Opening and closing accounts does not affect your score at all (unless the CREDITOR closes it LOL). What hurts you is too many inquiries for different types of credit. For example, if you are applying for a mortgage and three different lenders pull your credit in a two week time frame, that will hardly affect your score - if at all, but if you applied for a car, a mortgage, a few credit cards, a boat, a motorcycle, a department store card, ect… your score would drop noticeably. That being said, those inquiries would only stay on your credit report for 90 days and then they start to drop off, so it isn’t a long term problem. It’s more like a red flag to slow down.

Did I answer your question?

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[quote]angry chicken wrote:
I would apply for the card. Don’t close the BOA account yet, but start using the new one more often and paying it off completely each month. You will probably have a relatively low credit limit at first, that is fine - you can call them in six months or a year of good payment history and ask them to raise the limit. For a completely new account, it usually takes 3 to 6 months before it starts affecting your score, so you should NOT close the other secured account right away.

I think the strategy of accumulating accounts and closing others as the offers get better is a bit flawed in the long term. First of all, you should be paying off your credit card completely each month. As long as you do that, you will pay NO interest, so the interest rate really shouldn’t matter all that much to you.

Second, the longer you have a tradeline open the more of a positive impact it has on your score. If you become an “introductory APR whore”, constantly jumping from card to card and changing shit around all the time you will not reach your credit potential. The algorithm rewards stability and positive history. The longer you have the account, the more positive impact it will have on your score.

But don’t have TOO many accounts that you don’t ever use. You should try and use each card you have at least once every month or two - even for just a small purchase, and pay the whole thing off. If you just start racking up new accounts, but don’t use the credit extended to you, then you will start to get hit with “too much available credit”. LOL

I think a reasonable goal to shoot for (for REVOLVING accounts) is to have three to five quality credit cards (AmEx, VISA, MC, Discover) and to develop those accounts. VISA is the most widely accepted card on the planet. Call every year and ask for the balance to be raised. If you get an low APR offer in the mail, call each of your cards and tell them you have this offer and will they lower your interest rate. Sometimes they will.

Opening and closing accounts does not affect your score at all (unless the CREDITOR closes it LOL). What hurts you is too many inquiries for different types of credit. For example, if you are applying for a mortgage and three different lenders pull your credit in a two week time frame, that will hardly affect your score - if at all, but if you applied for a car, a mortgage, a few credit cards, a boat, a motorcycle, a department store card, ect… your score would drop noticeably. That being said, those inquiries would only stay on your credit report for 90 days and then they start to drop off, so it isn’t a long term problem. It’s more like a red flag to slow down.

Did I answer your question?[/quote]

Yes, that answered my question completely. Thank you! Just to clarify, what I meant by “better offers” wasn’t lower APRs as I’m not looking to go into debt. I have been, and will be in the future, paying off the credit cards completely every single month. I use my card as if it were cash. Only spend what I have the cash to pay off.

In that respect, I couldn’t care less what the APR is on my card as I have no intention of being late on payments. What I meant was better offers in rewards or points. The BoA card right now gives me nothing. As a matter of fact, I have to pay to use their service. This new offer is no annual fee and gives 1% cash back for all purchases. Thanks again, AC. I really appreciate the input.

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[quote]Nards wrote:

[quote]AdamC wrote:

[quote]Nards wrote:
I have no credit.

I’ve never been in debt and have money invested, but never got a credit card and have been in Taiwan 10 years and they won’t give one to foreigners here, from what I’ve heard, and don’t know how to go about getting one while overseas like this. I know it’s a good idea to have good credit by having a card and paying it off promptly but haven’t done it yet.

[/quote]

off topic but i was in taipei from saturday to weds. pretty cool place. i stayed at a hostel in the shida area. what do u do there?
[/quote]

I teach.
You were just here? Neat. Nice weather for it. Did you eat at any f the 5 or 6 burger places in the ShiDa area? They have great burgers around there. I live not too far from there…on the other side of the river.
[/quote]

haha the nice weather came on the day before i was leaving. i saw the evans burgers, but the lines were crazy at both of them. must be good. i stuck to the cheap stuff, mostly. a bowl of rice and meat (i’ll be fucked if i know what its called) set me back just 35NT.

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AC- wanna chime in on this?

closing for house set 3/11
offered another job (accepted, haven’t put in 2 weeks notice yet). Same industry, 2x the pay
Was going to turn in my 2 weeks on Monday, but was advised to wait till after closing.
Shit hit the fan this past week, slight chance I could be fired this week.

thoughts?

86

[quote]jehovasfitness wrote:
AC- wanna chime in on this?

closing for house set 3/11
offered another job (accepted, haven’t put in 2 weeks notice yet). Same industry, 2x the pay
Was going to turn in my 2 weeks on Monday, but was advised to wait till after closing.
Shit hit the fan this past week, slight chance I could be fired this week.

thoughts?[/quote]

I’m not AC, but put in your two weeks ASAP! I think it’s much better for your career long term to tell other future employers that you left your old job, not got fired.

Btw, AC - you’re a pimp.

As far as Dave Ramsey - I’ve read most of his stuff and I agree on a lot of what he teaches. However, his target audience is people like JF who know they CANNOT control themselves when it comes to getting into debt. Paying cash for everything is much better than paying credit for everything (in the scenario that one is paying credit for things they can’t afford). However, building a great credit score is much better than paying cash for everything.

In the end, a good mix is what I think works best. Paying cash for most purchases and even your car I think are great ideas. But paying for other items (gas, groceries, other items that you’ll be buying anyway) on a credit card and paying in full every month is a good idea, too. And let’s be realistic, no one is paying for a house in cash, so a good credit score is essential in getting the best interest rate.

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Great contribution to this thread AC, much appreciated

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Question - In the spirit of this thread I decided to check my credit reports. Everything looks pretty good, but they don’t include my actual score. Anyone know why that’s not included?

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Nice to see people making an effort to fix their credit (I’m fixing mine at the moment)

Does anyone know if there’s any benefit to getting a student credit card vs a standard one? They just seem like a standard card with trendy graphics on them with a higher interest rate.

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[quote]jehovasfitness wrote:
AC- wanna chime in on this?

closing for house set 3/11
offered another job (accepted, haven’t put in 2 weeks notice yet). Same industry, 2x the pay
Was going to turn in my 2 weeks on Monday, but was advised to wait till after closing.
Shit hit the fan this past week, slight chance I could be fired this week.

thoughts?[/quote]

I HATE it when that happens. The question you need to ask yourself is, do you trust your loan officer? You see, the FIRST thing that popped into MY head was that you are gonna be fucked. One of the things that is COMMON PRACTICE for underwriters nowadays is to do what’s called a “verbal VOE” (VOE is verification of employment) before docs are released (usually the day of or day before closing). Basically they are checking to see if you still have your job. One of the standard questions they ask is, “what is the borrower’s prospects of future employment?”. If you’ve put your two weeks in, what can they say? If you were JUST fired last week, what can they say? If they reveal either of those things, your loan will be denied…

The alternative is to submit your offer letter from the new company and update the file, but any underwriter worth their salt will deny the loan until you can provide 30 days worth of pay stubs… (they can’t sell the loan on the secondary with OUT that) At the very least it will cause the loan to be re-underwritten with just your spouse’s income which could delay your closing (assuming that she would qualify by herself)… I REALLY wish I had better thoughts to tell you.

At the end of the day, it is your Loan Officer who is flying the plane. I don’t know which bank you went to (or if it is a broker, correspondent lender, federally chartered bank, credit union, etc…). But I would advise you to trust your loan officer and do what he says. If he’s structured it a certain way and if he’s sure the underwriter won’t pull a verbal VOE, then you may slide by - I don’t know. The question you have to ask yourself is, do you trust him?

But if it’s an FHA loan you’re getting (and I’ll bet my bottom dollar that you are) MOST D.E. underwriters WILL make that verbal VOE call. Talk to your LO about it. Ask him directly if he thinks the underwriter will do a verbal VOE and explain the situation at your job.

The worst case scenario is that the loan will be denied. Depending on whether or not the financing contingency has expired in your sales contract (this is question for your Realtor) you may lose your security deposit. If your Realtor is worth a fuck, he will have given you several “outs” in the contract to protect your deposit. He/she MAY be able to work with the seller to wait until you have 30 days pay stubs (or perhaps the underwriter will accept a written VOE from the new employer and a letter of hardship - it really depends on the overlays and policies of whatever particular bank/lender is doing the loan). If the seller agrees to wait, there may be per diem charges that are accruing each day you delay past the contract date. On the other hand, if you are getting a new job with twice the income, you may qualify for a bigger/nicer house and this could turn into a blessing in disguise…

My advice would be to handle the shit at your present job. What ever it takes. Switching jobs in the middle of a real estate transaction is about the WORST thing you can do (besides tanking your credit score LOL).

With out any other information, my thoughts are that you have a VERY serious problem on your hands.

Don’t panic though. These things happen. Even if you lose your security deposit, it’s not the end of the world. Even if you have to live in a hotel for a month and put your shit in storage, it’s not the end of the world. Shit happens. If you’re qualified, you’ll get the house soon.

Keep us posted…

If you’re totally freaking out, PM me your phone number and I’ll call you tomorrow.

GOOD LUCK!

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[quote]LankyMofo wrote:
Question - In the spirit of this thread I decided to check my credit reports. Everything looks pretty good, but they don’t include my actual score. Anyone know why that’s not included?[/quote]

because you didn’t PAY for it, did you? LOL

If you went directly to the repositories, they will just provide you with the raw data.

A “REAL” credit report costs more than twenty bucks. This “free credit report dot com” bullshit uses and outdated algorithm and is trying to sell you some bullshit “credit protection” or “fraud alert” product.

If you want to know your score, go to a mortgage professional and tell them you want to buy a house. Ask for a copy of your report. He will offer resistance because he thinks you are shopping him and will try to take the loan elsewhere. Beg bitch piss and moan until he sends you a copy of your credit report. Good luck with understanding it if you’ve never looked at a “real” credit report before. If you are in a good mood, kick the guy a $20 because you just burned him for about that much. That being said, getting burned is part of the industry and he won’t take it personally.

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[quote]Soulja874 wrote:
Nice to see people making an effort to fix their credit (I’m fixing mine at the moment)

Does anyone know if there’s any benefit to getting a student credit card vs a standard one? They just seem like a standard card with trendy graphics on them with a higher interest rate.[/quote]

That is correct, it is most likely just a shittier card with a higher rate. Read the fine print, some of the student accounts actually report as an INSTALLMENT account vs. a REVOLVING account. Stay away from installment account type credit cards. They structure them that way to avoid some of the new regulations that were designed to protect consumers (in other words, they want to retain the ability to jack your rate and/or payment whenever the fuck they feel like it).

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thanks AC. I ended up contacting the lender and put it in a way that I was considering the job.

He said putting in 2 weeks could cause problems, and that they do a VOE 5 days prior to closing. Which would be tomorrow, but he said that may be delayed since the final inspection from the appraiser is not done yet.

This whole deal has been a cluster fuck, and time will tell. I really hope A. don’t get fired B. don’t lose EMD ($2,000)

and yup, FHA and with only my wife no way we would qualify.

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[quote]angry chicken wrote:

[quote]LankyMofo wrote:
Question - In the spirit of this thread I decided to check my credit reports. Everything looks pretty good, but they don’t include my actual score. Anyone know why that’s not included?[/quote]

because you didn’t PAY for it, did you? LOL

If you went directly to the repositories, they will just provide you with the raw data.

A “REAL” credit report costs more than twenty bucks. This “free credit report dot com” bullshit uses and outdated algorithm and is trying to sell you some bullshit “credit protection” or “fraud alert” product.

If you want to know your score, go to a mortgage professional and tell them you want to buy a house. Ask for a copy of your report. He will offer resistance because he thinks you are shopping him and will try to take the loan elsewhere. Beg bitch piss and moan until he sends you a copy of your credit report. Good luck with understanding it if you’ve never looked at a “real” credit report before. If you are in a good mood, kick the guy a $20 because you just burned him for about that much. That being said, getting burned is part of the industry and he won’t take it personally.
[/quote]

This is what pisses me off, it’s MY fucking credit score and MY fucking credit information. Why they hell do they make it so difficult for me to obtain?

Sorry, AC, it just seems ass backwards to me, unless there is some shit I’m unaware of that would make the system logical.

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The entire system is illogical. If an inquiry into your credit score can all by itself decrease your score, some idiots put that together.

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It DOES seem a bit fucked up from a RESPONSIBLE consumer perspective, but keep in mind, the MAJORITY of people who use credit are NOT responsible! LOL Look at our national debt! People are stupid.

That’s why the system was created in the first place. It is a RISK ASSESSMENT designed to protect those who EXTEND CREDIT. It is NOT designed to protect the consumer. There has been a TON of analysis done on the measurable behavior of consumers. One of the MANY things that is a potential red flag is applying for new credit (and the corresponding inquiry). According to the algorithm, which is based on the history of MILLIONS of borrowers, cumulative inquiries are a signal that a consumer is in financial trouble. It may not be true in YOUR particular case, but if that’s what the trend shows, that’s how they are going to build the model. At the end of the day, a bank is simply trying to protect it’s investment and avoid lending to someone who is likely to default.

I’m not saying it’s right, or fair - that’s just what it IS. My goal is simply to understand as much about the process as I can, so that I can advise my clients on how to use the algorithm to their advantage.

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[quote]angry chicken wrote:
It DOES seem a bit fucked up from a RESPONSIBLE consumer perspective, but keep in mind, the MAJORITY of people who use credit are NOT responsible! LOL Look at our national debt! People are stupid.

That’s why the system was created in the first place. It is a RISK ASSESSMENT designed to protect those who EXTEND CREDIT. It is NOT designed to protect the consumer. There has been a TON of analysis done on the measurable behavior of consumers. One of the MANY things that is a potential red flag is applying for new credit (and the corresponding inquiry). According to the algorithm, which is based on the history of MILLIONS of borrowers, cumulative inquiries are a signal that a consumer is in financial trouble. It may not be true in YOUR particular case, but if that’s what the trend shows, that’s how they are going to build the model. At the end of the day, a bank is simply trying to protect it’s investment and avoid lending to someone who is likely to default.

I’m not saying it’s right, or fair - that’s just what it IS. My goal is simply to understand as much about the process as I can, so that I can advise my clients on how to use the algorithm to their advantage. [/quote]

Lots of good information in this post, however, I still don’t know why I’m not allowed to view my own information whenever the hell I want. :frowning:

Edit - Good thread, btw. Personal finance is something I’ve always taken an interest in.

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well, I didn’t get fired, Yay lol