Credit experts - credit rating question

[NyteByte]

Here is a theoretical question:

What would happen to your overall credit rating if you went from having a normal amount of debt (car payment, mortgage, etc) to no debt whatsoever?

Would having absolutely zero debt adversely affect your credit rating or would there be no change?

 

[Stanley]

Who cares if you are out of debt. I am working hard to get that way now. I am sending 3/4 of my overtime money to pay off my car this year. Only $9048to go

 

[MonkeysL]

Here is a theoretical question:

What would happen to your overall credit rating if you went from having a normal amount of debt (car payment, mortgage, etc) to no debt whatsoever?

Would having absolutely zero debt adversely affect your credit rating or would there be no change?

the lower ur debt the higher ur score is going to get. if u still have credit cards u use and pay off monthly or keep under %35 that would be seen as open lines of credit which helps ur credit out, showing people trust to lend to u (two+ major credit cards).

 

[YesterdayAgain]

In terms of credit scores, utilizing 0% of your available credit will adversely affect your score.

 

[ON D BIT]

In terms of credit scores, utilizing 0% of your available credit will adversely affect your score.

this is true however its not going to effect it much. for me knowing that credit is a hundred billion dollar industry is enough to keep me away. no more credit cards for me. b of a made 21 billion net last year. chase bank made over 14 billion net in 06.

 

[Sonic04]

One of my in laws sold thier house, payed everything off, and had trouble getting financed for a truck a year later. They said that he basically had no credit because he didn't owe anything. (at least two banks told him that)

 

[YesterdayAgain]

this is true however its not going to effect it much. for me knowing that credit is a hundred billion dollar industry is enough to keep me away. no more credit cards for me. b of a made 21 billion net last year. chase bank made over 14 billion net in 06.

Credit utilization is around 30% of your score if I recall correctly. Just how much worse over-utilization affects your score rather than under-utilization I do not know.

 

[JDStud6]

this is true however its not going to effect it much. for me knowing that credit is a hundred billion dollar industry is enough to keep me away. no more credit cards for me. b of a made 21 billion net last year. chase bank made over 14 billion net in 06.

The gas industry makes more than that....you not using gas either?

JD

 

[ON D BIT]

The gas industry makes more than that....you not using gas either?

JD

so you think its a good idea to pay more than the actual sale price on everything you purchase?

 

[wally9404]

the lower ur debt the higher ur score is going to get. if u still have credit cards u use and pay off monthly or keep under %35 that would be seen as open lines of credit which helps ur credit out, showing people trust to lend to u (two+ major credit cards).

wrong! when you pay your credit card off and have a zero balance your credit score actually goes down!

 

[virginiafiveo]

always use your credit cards, I keep them under 25% of limits and always make payments, I have 4 of them......they are all very very low right now but still there. and I have 2 car payments and a signature loan, my score is upwards of 700 right now. the only reason I think the bank wouldn't finance the person who sold their house etc, was because of a problem with continuous predictable pay, or buying something in their opinion was above your level of easy affordability.

 

[ArthurJGuy]

wrong! when you pay your credit card off and have a zero balance your credit score actually goes down!

The way I understand it, if you pay your credit card off and close the account - then your score drops.

However if you keep the account open but keep a low to zero balance, your score is improved. This shows creditors that you have access to funds (on your card) but the self control to not use it unless needed.

 

[Traffic_Cone]

I honestly love talking about credit personally, here's a few of my little tip's I always post up to sum up a few things about credit.

-Keep utilization below 30%.
-Don't apply for subprime cards.
-Mulitple store card's isn't always a good idea
-Don't always try for student card's because even though their easy to get they are not really generous on credit lines if you plan to keep it open for awhile.
-Apply for card's that report to all 3 credit bureau's (Transunion,Experian,Equifax)
-Keep the number of hard inquiries down to a minimum because they stay on your file for 2 years.
-Bump soft credit pull's off by using 24+1hr credit watching programs such as TrueCredit from TransUnion.
-Don't bump your credit files to much because you cant create split-files which is not good and I can explain if anyone would like to hear about it.
-If you do apply for student card's try and convert them into other cards by calling the # on the back of your new card once you receive it. Citi Dividend for Student's -> to Citi Simplicity or etc.
-Once you build good relationship's you will recieve generous CL's automatically and sometimes having to sacrifice a hard pull to lower your overall utilization.
-Once you have generous size CL's try to stay under 15% utilization.
-Just because you pay it in full every month doesn't mean jack because if you have terrible utilzation your SOL.
-No matter if you PIF they make money off you either way because they charge the vendor a % fee per transaction (Visa/Mc 1.5%-2%,Disc 2%-3%, Amex 3%-4.5%)
-And having a few credit card's does not create debt, it helps prevent if a creditor rate jack's you leaving you SOL. If a situation occur's like such other card's are their for lower % balance transfer's and etc.

This is barely touching the surface but if anyone has any questions feel free to post up and I can try and answer to the best of my knowledge.

-Josh

 

[svtcobra2k3]

Is the American Express Blue Card any good to help build credit? I want to use it to pay off a personal loan and take advantage of the 0% interest for a year, and then pay it off.

 

[YesterdayAgain]

always use your credit cards, I keep them under 25% of limits and always make payments, I have 4 of them......they are all very very low right now but still there. and I have 2 car payments and a signature loan, my score is upwards of 700 right now. the only reason I think the bank wouldn't finance the person who sold their house etc, was because of a problem with continuous predictable pay, or buying something in their opinion was above your level of easy affordability.

I wouldn't advise this.

 

[ON D BIT]

one of the biggest indicators for credit score is available credit compare to actual debt.

2 examples
higher score ~ having 200k in credit with 50k in debt
lower score ~ having 5k in credit with 4k in debt

higher score ~ having 200k in credit with 0 debt
lower score ~ having 200k in credit with 50k in debt

and no paying more for items is not a good idea.

 

[Ry_Trapp0]

I honestly love talking about credit personally, here's a few of my little tip's I always post up to sum up a few things about credit.

-Keep utilization below 30%.
-Don't apply for subprime cards.
-Mulitple store card's isn't always a good idea
-Don't always try for student card's because even though their easy to get they are not really generous on credit lines if you plan to keep it open for awhile.
-Apply for card's that report to all 3 credit bureau's (Transunion,Experian,Equifax)
-Keep the number of hard inquiries down to a minimum because they stay on your file for 2 years.
-Bump soft credit pull's off by using 24+1hr credit watching programs such as TrueCredit from TransUnion.
-Don't bump your credit files to much because you cant create split-files which is not good and I can explain if anyone would like to hear about it.
-If you do apply for student card's try and convert them into other cards by calling the # on the back of your new card once you receive it. Citi Dividend for Student's -> to Citi Simplicity or etc.
-Once you build good relationship's you will recieve generous CL's automatically and sometimes having to sacrifice a hard pull to lower your overall utilization.
-Once you have generous size CL's try to stay under 15% utilization.
-Just because you pay it in full every month doesn't mean jack because if you have terrible utilzation your SOL.
-No matter if you PIF they make money off you either way because they charge the vendor a % fee per transaction (Visa/Mc 1.5%-2%,Disc 2%-3%, Amex 3%-4.5%)
-And having a few credit card's does not create debt, it helps prevent if a creditor rate jack's you leaving you SOL. If a situation occur's like such other card's are their for lower % balance transfer's and etc.

This is barely touching the surface but if anyone has any questions feel free to post up and I can try and answer to the best of my knowledge.

-Josh

how would you suggest i go about building credit? i dont have any right now. what cards would you suggest i apply for?

 

[Grizzly Adams]

This is rediculous!!! It is crazy the way you have to have open credit accounts or your credit drops, your credit rating is penalized if you don't have enough credit out a one time, and so on. You are basically paying a crap load of money just to have a good credit score. It makes no sense at all, it's no wonder everyone is constantly asking questions about credit.

The things that you would think would make sense to up your credit like low balances, paying items off and being debt free are actually hurting you. Like I said it makes no sense!!!

 

[V-Sicks]

how would you suggest i go about building credit? i dont have any right now. what cards would you suggest i apply for?

im in the same boat, suggestions?

 

[MonkeysL]

wrong! when you pay your credit card off and have a zero balance your credit score actually goes down!

sorry but u are completely wrong. if u use ur credit card and pay it off monthly it improves ur credit. it shows "good faith" and also shows up as less debt. debt is negative no matter how, where, or why