Avernus Posted May 12, 2011 Share Posted May 12, 2011 I have been following my credit a lot lately trying to get my score as high as possible and I was wondering what an ideal debt/credit ratio would be because if I pay off all my debt then my score would take a massive hit, yet it shows my highest score if I keep my debt at 1% of what my total limit is....is this true? (this is all according to a score simulator which I find skeptical anyways) So anyways, should I keep it at around 10% of what my total limit is, or should I really bring it down to 1%?... Quote Link to comment Share on other sites More sharing options...
Big Country Posted May 12, 2011 Share Posted May 12, 2011 Are you looking to make a particular purchase where you need a high score, ie home refinance or purchase, or is this just to be able to have a high score? If the first, then the lower the better according to this report, this article and this article. Then again, I would still question the point of not paying off revolving debt right away (ie credit cards). Why pay interest to credit card companies unneccesarily? I;d think that would cost you a lot more in the long run than anything you would save by boosting your credit score a couple of points. Quote Link to comment Share on other sites More sharing options...
montster Posted May 12, 2011 Share Posted May 12, 2011 Everything I've ever read has said your score does depend on how much available credit you have. However, I've never seen anything suggesting that having some revolving debt is better than no revolving debt at all. From what I've read, if you can't pay everything off, try to keep it under 10 percent. But if you can pay it all off, I would say it's better to do so. Even if you kept it at 1 percent, I can't imagine there would be much of a difference in your score than if you just paid everything off. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted May 12, 2011 Share Posted May 12, 2011 It's a racket. There are some factors that work directly against each other, especially in the way insurance companies use it. Too much revolving credit, too little, not enough credit, too much credit. Bah, F all of them. They manipulate your records to obtain what they want. Quote Link to comment Share on other sites More sharing options...
ljbrun Posted May 13, 2011 Share Posted May 13, 2011 Don't know if this helps, but keep in mind that paying off your credit card debt every month doesn't mean that your credit card debt will be 0.0%. The calculation is based on a snapshot that may occur anytime, not just after you pay your credit card bill. When I refinanced my house in December, my credit score was very good (800+). Even though my credit card balance is paid off every month, chances are the balance used during the calculation was probably 20-30%. Also, at the time, I only had one credit card account which is almost 20 years old, which is also a factor. Quote Link to comment Share on other sites More sharing options...
Avernus Posted May 13, 2011 Author Share Posted May 13, 2011 Are you looking to make a particular purchase where you need a high score, ie home refinance or purchase, or is this just to be able to have a high score? If the first, then the lower the better according to this report, this article and this article. Then again, I would still question the point of not paying off revolving debt right away (ie credit cards). Why pay interest to credit card companies unneccesarily? I;d think that would cost you a lot more in the long run than anything you would save by boosting your credit score a couple of points. I want to have a low interest rate as well as lower what I am having to pay when the time comes for me to make my next purchase for a house which is probably early next year.... the plan was to keep everything between 1-5% by September so that what I am paying is minimal and to start getting cards with low interest rates because of the hiccup I had in 2003 which killed my credit up until about a year ago.... so it's a matter of paying less interest as well as having a high score so I get lower interest rates....I just simply don't want to be in too much debt until I decide to do something that would be considered "good debt"... on equifax.com, they have a score estimator which gives you a range of what your credit will be in if you do certain things and while I don't take it as gospel, I use it as a barometer to where my score will be at a certain point.....and the way it shows the range of scores, the highest my score would be is when I get everything down to 1% and then it's quite a bit lower than where it is now if I take it down to 0......I find that a little funny, but whatever I'm going to check those links once I get a second and hopefully they answer my questions and I appreciate the responses from everyone, I have a few things to try and take in now.... Quote Link to comment Share on other sites More sharing options...
Avernus Posted May 13, 2011 Author Share Posted May 13, 2011 Everything I've ever read has said your score does depend on how much available credit you have. However, I've never seen anything suggesting that having some revolving debt is better than no revolving debt at all. From what I've read, if you can't pay everything off, try to keep it under 10 percent. But if you can pay it all off, I would say it's better to do so. Even if you kept it at 1 percent, I can't imagine there would be much of a difference in your score than if you just paid everything off. that's what I said....there is a stark difference between where I'm at now (about 36%) and 1% and there is about twice the difference of that between 1% and 0 on the "score estimator" which I am starting to consider a joke..... I have always heard that it is good to have some debt because of how creditors look at you, but the verbiage seems to almost contradict itself... Quote Link to comment Share on other sites More sharing options...
Avernus Posted May 13, 2011 Author Share Posted May 13, 2011 It's a racket. There are some factors that work directly against each other, especially in the way insurance companies use it. Too much revolving credit, too little, not enough credit, too much credit. Bah, F all of them. They manipulate your records to obtain what they want. don't even get me started there seems to be a fine line between heaven and hell when it comes to credit... Don't know if this helps, but keep in mind that paying off your credit card debt every month doesn't mean that your credit card debt will be 0.0%. The calculation is based on a snapshot that may occur anytime, not just after you pay your credit card bill. When I refinanced my house in December, my credit score was very good (800+). Even though my credit card balance is paid off every month, chances are the balance used during the calculation was probably 20-30%. Also, at the time, I only had one credit card account which is almost 20 years old, which is also a factor. this is the problem I have...I only have one card that is 10 years old and it is closed, but will also probably be wiped off my credit in a few weeks when it hits the 10 year mark. I want to try and over-compensate for the lack of history after that card is wiped off which is only about 6 years since I started trying to re-build....I am currently snowballing accounts starting with the one with the highest interest which is also my highest balance as well and it will be paid off next week and then another card will be paid off in a month after that.... this way I hope my score will be back to where it is now after I take the hit of having my credit history reduced by 4 years and a couple of months.... I know that the only way to have a score of 800 or even in the ballpark is to have a minimum of 10 years of credit history and/or own a house which should propel my credit to 800+ within 2 years if I don't screw up good info here though and again I appreciate all the responses, they are great Quote Link to comment Share on other sites More sharing options...
Atlanta Cracker Posted May 13, 2011 Share Posted May 13, 2011 My guess is that the 0% assumes you aren't using them and thus don't have a payment that you are current with. If you have your cards all paid off and use them for groceries each month and pay that off then it should still be a positive to your credit. I wouldn't open any new credit between now and when you want to purchase a house either. The more inquiries and new lines you have the lower your score. Simply doing what you are doing by paying down your debt and staying current on everything should have a very positive effect on your score. Quote Link to comment Share on other sites More sharing options...
Avernus Posted May 13, 2011 Author Share Posted May 13, 2011 My guess is that the 0% assumes you aren't using them and thus don't have a payment that you are current with. If you have your cards all paid off and use them for groceries each month and pay that off then it should still be a positive to your credit. I wouldn't open any new credit between now and when you want to purchase a house either. The more inquiries and new lines you have the lower your score. Simply doing what you are doing by paying down your debt and staying current on everything should have a very positive effect on your score. it's funny you should say that...I had thought about that exact thing a few days ago....so maybe I'm not too off base with that then... the one thing I am liking about this thread is that this info can help anyone, not just myself....some very good responses so far Quote Link to comment Share on other sites More sharing options...
montster Posted May 13, 2011 Share Posted May 13, 2011 If you are married and your spouse has credit cards he/she has had for a long time, you can get your name added to those accounts. Then they'll show up on your credit report as old accounts with high limits, which should raise your score, assuming the cards are in good standing. Quote Link to comment Share on other sites More sharing options...
Avernus Posted May 13, 2011 Author Share Posted May 13, 2011 If you are married and your spouse has credit cards he/she has had for a long time, you can get your name added to those accounts. Then they'll show up on your credit report as old accounts with high limits, which should raise your score, assuming the cards are in good standing. good info here, I believe there was a website that paid people to allow others to use their credit accounts to help other people by adding them as a user, but would restrict them from being able to request any info or use the account in any way.... but I think that site was exposed for being a scam and they built a negative reputation quickly... Quote Link to comment Share on other sites More sharing options...
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