My credit card offers free scores from Trans Union. When I went for a car loan, they ran it and gave me a FICO about 5 points higher than my TU score (which was ~820). So while there’s variation, it doesn’t appear to be major in my limited experience.
Speaking of FICO scores, I was just playing with my TU page (inspired by this thread) and they have a page where you can adjust things to see how it would affect your score – add a card, miss a payment, have to settle a debt, etc. I toggled moving a credit card balance to another card and it dropped me from 820 to 775 which seems like a pretty big jump. I know some people regularly flip their balance to another zero interest card so does that large of a dip sound correct?
I’m not making any financial decisions based off the responses, don’t worry. Was just fiddling with the options and that seemed extreme to me.
They look at credit score ranges to see what bucket you are in and payment history, is what a CPA told me. So rising and lowering a few points doesn’t matter provided you are still in the bucket range.
Besides being approved for loans, a higher credit score and good history can sometimes give you a better interest rate for loans. But as they say, your mileage may vary.
Yes, and Discover explicitly (well in the small text) that they use TransUnion.
There may be small discrepancies between bureaus, but if your score is over 800 this is unlikely, so the other two probably won’t give you much more info.
I always get a kick out of those American commercials - “oooh, look at my credit score! Now I can afford that XXXX…” I would think the whole point of a good score is because you don’t rack up more debt the moment you can.
Like Don Draper would say on Mad Men, if you don’t like what they are talking about, change the conversation. So the companies have changed the conversation from saying, good for you, great credit score…you should feel proud of yourself. To, look at this high credit score, you must have tons of unused credit available to go on that 50 day cruise or stay in those 5 star hotels.
Some people are constantly high consumption consumers and that’s their target audience. A friend of mine’s husband is a mortgage loan officer. He said some people come in with total credit card debt as high as $100K who are applying for a mortgage.
I can’t even begin to imagine credit card debt approach $100K. I think it would be exhausting spending the time to accumulate those charges.
Shit, how do you even get that much credit card debt extended to you? Between my wife and I, both of whom have high (800-ish) credit scores and a respectable middle class income, I doubt we even have half that available to us across all our credit cards. I mean, that’s like a small mortgage worth of debt at credit card rates. Insane.
My Discover, MC, and Visa are 10K each and I think that’s too much. I remodeled a house a couple of years ago and made several multi-thousand dollar purchases on my Discover card. Even though I paid my balance off every month, like magic I started receiving offers to up my limit. No wonder people get up to their eyeballs in debt.
It is insane. But that is only four credit cards with a $25K credit limit on them. I didn’t get the details of how many credit cards they had or how long it took them to get to $100K of debt just on credit cards.
I know for our personal credit cards, which are only two cards, they have increased the credit limit without us asking over the years. I guess if we applied for two more cards like this they may give us the same credit limit. So there you have $100K in credit card limit, and then go nuts spending. But along the way, you miss payments and start making minimum payments, I guess it would grow to be huge like this. The credit card companies don’t seem to care provided you have the collateral and the income to extend credit to you more than you would really need. They’d love for you to just keep making the minimum payments.
I know with Discover Card I’m kind of shocked if after you credit back the 1% rewards to the card, that the bare minimum payment is very low.
Maybe someone who is an accountant who has seen this sort of thing with clients could describe an actual process they have seen people dig themselves into $100K of credit card debt.
I remember seeing part of an infomercial on buying/selling real estate years ago where the guy told people to get like 100 credit cards. Then do a cash-advance on them to be able to buy a home and flip it, then pay-off all the credit cards. I remember seeing he showed a small box full of credit cards. The whole thing was laughable and sick at the same time.
Oh, yeah, they study data on the habits of people and these offers. They know exactly what they are doing. In that industry, the worst credit card consumer to have are the ones who pay the bills off in full each month. Sure, they make money charing the vendors for the use of the card, but what they really want is you to charge a bunch of stuff on it, miss a payment and then only make minimum payments until max out your credit limit.
I forget how they calculate the loans for credit cards, but they are very dangerous. I read recently someplace were it said that a $5K credit card balance at 18% would take 30 years to pay it off.
It’s not terribly hard to have a high credit limit. If you don’t have lots of assets and/or spending, just build a history, keep a couple cards up. You can request a raise every now and then. I asked Discover for one a few months ago; they said no. Then a month later they sent me a letter saying they “decided” to raise it :dubious:
If we’re talking about rich(?) people with $100,000 debt on a card(s), that’s a very different story.
I think that those figures usually assume the minimum payment, which is extremely low.
I seem to recall being bemused by this a few years ago on this board but it never came up for me since then so I never looked any deeper into it.
I’m in the UK so don’t know if we have the same sort of credit scores here but I’ve honestly no clue what mine would be or what it would need to be in order to make any difference to my life. If there are potentially some “freebies” on offer for having a good score I suspect I’m missing out on something here. Can any UK dopers offer an opinion?
I understand that and what a FICO score is all about. I was more specifically asking about why the “What if…” page on the Trans Union site suggests that moving a balance to another card would result in a 45 point drop.
Oh, sure, I know that. But when the whole credit fiasco and housing crisis happened about a decade ago, lenders (at least to me) really tightened their shit up. Before, when I was in college and hardly even making money, they were happy to start me off on $1K and then keep incrementally bumping it over the years, eventually to $7K or $8K. A few years ago I got a business card–mind you, this was with an 800+ credit rating and a couple hundred thousand socked away-- and I had to beg and plead for them to give me $10K on that card. I actually had to lower the credit limit on one of the personal cards I had with that bank (like from $10K to $5K) so they could give me a $10K limit on that card.
I just found it somewhat ironic that when I didn’t have any money and a marginal credit rating (I got as low as 620 when I was in my 20s), they were more than happy to throw money at me and raise my limit without my asking, but once I grew up and lived within my means, paid off my debts, and actually had plenty of money stashed away, I had to fight with them to get a reasonable credit limit. (And the only reason I need that high a limit is for renting photographic equipment, where they put a hold on your credit card for the full replacement value of the rental equipment.)
That sorta makes sense. When someone is young and irresponsible they tend to spend more on non-essential crap. Additionally their income is usually minimal. The card companies know this so they throw money so as to drive the persons debt up and get them to carrying their monthly balance forward. As someone mentioned earlier, card companies hate the ones who pay off their balance each month.
Yeah, but are you seeking out as much credit as possible, applying for several cards and asking to up the credit limit on them? I’ve got a single middle-class income and don’t try to strain credit, and have something like $35k available credit across my credit cards (one with my credit union, one with a bank that has better rewards, two store specific cards that give discounts). If I started asking for more on those cards, took up Target and other ‘hey, do you want our store card’ offers, and applied for some of the offers that come in the mail, I’m sure I could triple that (my credit union card went from $5k to $20k credit limit over time without me even asking). I wouldn’t want to have that much credit, but I’m not the kind of person who racks up $100k credit card debt either.
One of mine has a $40k limit (more than my house) after almost 30 years with them, which I think is their max (or at least, for someone with my current income). I’ve always carried little to no balance and every 5 years they bumped the limit $5k until a while back. I actually called them to protest, as I was worried about what happened if the card was lost, stolen, or hacked. I never lowered it because yeah, reducing the limit would impact my score and the two times it had fraudulent charges they took care of it, no muss, no fuss.
Yeah, if you hold the card for a long time, use it occasionally, and pay it off regularly, they’ll keep raising your limit.
I mean I don’t think I have ever had more than about 5k on the card, and that was a special case, yet that same card has a limit somewhere north of 30k now.
For whatever reason, they don’t for me. They stopped doing it around 2007 or so. My business card still has the same credit limit it came with seven or eight years ago. I use it every month and pay it off every month. Same with my personal cards. It used to be that they gave me credit raises twice a year. Now, I have to ask for them, even though I’m in a much, much stronger financial position than I was when they were giving them to me unasked (and unwanted, I should add. The cynical part of me thinks they knew what they were doing, though, getting a 20-something with so-so financial skills more and more credit available to him, as long as he was paying his bills on time. They did make a heap of interest on me, and I did end up using the credit they extended to me.)