[QUOTE=Jean Gray]
This bears repeating: AVAILABLE CREDIT DOES NOT = DEBT, unless you have no control over your spending habits and feel compelled to immediately max out a card as soon as you get it.
[/QUOTE]
Some of us have heard you. Others never will. Most people abuse their credit.
Yes, I see. There aren’t a lot of great options for someone in that position, but this might be beneficial if it was handled right.
[QUOTE=Jean Gray]
This bears repeating: AVAILABLE CREDIT DOES NOT = DEBT, unless you have no control over your spending habits and feel compelled to immediately max out a card as soon as you get it.
[/QUOTE]
Yeah, no shit.
You said that the OP should keep credit cards he doesn’t want. You later said he should use them. After that, you said he should actually keep a balance from one month to the next, or it would be just like he didn’t use them. Using a credit card is taking out a loan. That what that means.
You haven’t yet given any reason for doing this, other than that the lenders want you to, and they will lower your credit rating if you don’t.
Nobody has their crap together than the financial institutions. (maybe Pharm) They have pushed through a horrible bankruptcy bill and can do whatever they want. They can decide to crank credit card rates up to 30 percent. If you look around for another card ,the requests of your credit rating will automatically cause your rate to rise. If you are late for any payment ,but pay your card on time, they can jack up your percentage. They hold all the power.
I had a card a few years ago.No matter when I sent the payment in I got a late charge. First I sent it a couple days early . Then a week . Then 10 days. The next bill included a late charge. When I called they said processing took longer than the amount of time I was early. They lied. They could get away with it and they did it. Pay off every month and be vigilant. They will cheat you.
I had a card that I was paying off a month ago. It had an $8.94 balance. Sent the check. They processed the check as $894.00. Because of Check21, they sent it on as an ACH transaction so there was no audit trail. My credit union reversed it for me, but talk about a hassle. I contacted the card company to report their “error” (some might say “attempted theft”). The rep asked how they could help. I asked him to read the amount of the last payment - “$894”. Great - now the last statement balance? “Eight dollars and… oh”. He said they would call me back. Never did. Now I get a letter from the credit card company saying that my financial institution declined my payment. I expect I will see a late fee on the next statement.
Who exactly is minding the store?
One point for me! Or maybe that should be one half point since I STILL havent heard anything from one of the two companies.
Just got off the phone with customer relations for the bank that’s the lesser of the two evils.
The rep reviewed my acct, determined I was telling the truth and there was a mixup. She reversed all charges and apologized.
I told her apology accepted, I expect this not to show on my credit report, and told her that I didnt appreciate having to get the companies attention by indicating that I would go to the next step and file an official complaint and suggested that the company remove the auto response of “we reviewed your acct and determined the charges to be valid”. I finished by telling her how I appreciated that she took responsibility for my concerns and resolved them, and extremely appreciative that she gave me her name and direct number.
Does anyone know off hand how long a CC company has to answer a dispute in writing?
I checked over my bank statements and show where the check that I sent with the 2nd letter to correspondence address has been cashed, is that proof enough that they received letter vs certified?
[QUOTE=saoirse]
Yeah, no shit.
You said that the OP should keep credit cards he doesn’t want. You later said he should use them. After that, you said he should actually keep a balance from one month to the next, or it would be just like he didn’t use them. Using a credit card is taking out a loan. That what that means.
You haven’t yet given any reason for doing this, other than that the lenders want you to, and they will lower your credit rating if you don’t.
[/QUOTE]
If you’re not in the market - or not ever going to be in the market - for anything that is impacted by your FICO score, then managing that score in the way Jean Gray recommends isn’t going to matter. However, if you ever want to have a car loan or a mortage or a personal loan, etc., then you want the highest score possible. Now, it sounds like you don’t use credit much, if at all. Which is commendable. But that doesn’t mean that what she says is wrong in how it impacts your FICO score. Credit and loans of all kinds are a fact of life for a whole lot of people, and it’s best to understand that wisely managing your credit cards and therefore your score can be a good tool for getting the best terms on other kinds of loans.
Yes, it is a balance between using the card just enough to get a good score, but not so much it lowers your score. And yes, you should keep cards open you don’t want if you’ve had them a long time because it shows how long you’ve had credit. You want some cards, but not too many cards. Etc. Yeah, it can be confusing, but you have to understand that lenders want to know quickly what kind of a risk you are without the overhead of a human looking at your credit.
And Jean Ray didn’t say he should necessarily revolve a balance all the time. She said that if you are going to pay it off every month, you should instead occassionally let it roll over so it is clear that you do use credit and you do make timely payments. You may not agree with the algorithims that go into modern assessment of credit risk, but that’s the game.
[QUOTE=Pixilated]
Does anyone know off hand how long a CC company has to answer a dispute in writing?
I checked over my bank statements and show where the check that I sent with the 2nd letter to correspondence address has been cashed, is that proof enough that they received letter vs certified?
[/QUOTE]
My understanding is they have to respond to a dispute in 30 days or they have to remove the item. They don’t have to resolve the dispute, just respond. A letter saying “we got your dispute” is sufficient to meet this standard.
[QUOTE=niblet_head]
Re: the OP’s problem with auto-pay through your credit card company… I was warned years ago by a financial planner to never ever use this service for exactly the fuck ups outlined in the OP. They can’t seem to not screw it up. (Like paying off your balance when you only want to make the minimum payment.) You are much better served by setting up your own tickler system for making your payments by the due date.
[/QUOTE]
It looks like the OP is getting things resolved, but this might bear repeating. I’d have second thoughts about allowing anyone or any company access to my bank account.
I don’t allow it. I know someone who had just that problem - wanting to make a minimum payment and instead going into overdraft protection because the CC company had paid it in full. So, instead I set up accounts for my utilities, credit cards, etc. through my electronic banking. When a bill comes in I enter the amount I want to pay, set the bill payment date, and forget it. I considered authorizing my mortgage company but thought better of it. Instead I set up a recurring payment (because I know exactly what it will be each month) and haven’t thought about my mortgage again. An advantage here is that my bank guarantees payment if the non-payment was their fault (such as delivery after the promised date or some other mishap), and they are closer and easier to deal with than a credit card company.
[QUOTE=niblet_head]
However, if you ever want to have a car loan or a mortage or a personal loan, etc., then you want the highest score possible.
[/quote]
I get the way this game works. No one can say why anyone would have a higher credit rating for borrowing money when they don’t need to, though. I don’t need a car loan; I’ve paid mine off, and the car runs fine. The mortgage is nopt my problem anymore, except that I provide some of the money.
Funny thing is, my father was always really good with finances. He never used a credit card unless he had to, and always seemed to get car loans and mortgages just fine. In fact, I remember when the utility company would not take credit cards for payments. So obviously this is a pretty recent development.
What she said was he would have to kkep a balance, which means paying interest on all the charges form that month, or else his credit score would suffer. For no apparent reason. Is the fact that lenders use such capricious standards in judging borrowers at all related to the fact that their solvency now depends on a bailout form the federal government, and that their solvency five years ago depended on Congress completely rewriting a hundred-year-old bankruptcy law?
[QUOTE=saoirse]
I get the way this game works. No one can say why anyone would have a higher credit rating for borrowing money when they don’t need to, though.
[/quote]
Because the lenders have decided that the way to judge if you will pay in the future is if you have paid in the past. You don’t need to borrow the credit card company’s money for longer than the grace period if you don’t want to. You get their money for free if you pay if off by the due date. But in having a credit card you have established a) that someone else has been willing to give you credit in the past and b) that you pay it back. Look, credit cards aren’t the best credit, sure. Your credit history actually looks better if you have a car loan in addition to cards. Credit cards can be borrowing money when you don’t “need” to, but if you work it right it can help you a lot when you do need to borrow. And I think Jean Ray has said pretty well why someone would have a higher credit rating for borrowing money when they don’t need to. Again, you don’t have to think it’s right, but that is the way it works in this modern world.
[QUOTE=saoirse]
Funny thing is, my father was always really good with finances. He never used a credit card unless he had to, and always seemed to get car loans and mortgages just fine. In fact, I remember when the utility company would not take credit cards for payments. So obviously this is a pretty recent development.
[/quote]
No one is saying you have to use a credit card regularly, or even have one at all, to get a loan or even to get a favorable loan. Every institution is going to have their own lending process. But if you have a credit card, you’d be stupid to not manage it to your advantage.
She was responding to a different poster about paying off your balance in full every month. And she did explain the reason. Again, you may not agree with the system, but this is the system we have.
(She did say to the OP that since he’s paying off his balance, he should do it on an open account, not a closed one, and with the best teaser rate he could find.)
No. FICO has been around for much longer than that. Lenders have always used capricious standards in judging borrowers even before FICO. Anything they can do to make the most money. This is nothing new.
Thanks, niblethead, for filling in some info for me.
[QUOTE=saoirse]
I get the way this game works.
[/quote]
You say this, but then you say this:
[QUOTE=saoirse]
What she said was he would have to kkep a balance, which means paying interest on all the charges form that month, or else his credit score would suffer. For no apparent reason.
[/QUOTE]
Which shows that you really don’t get it.
I didn’t tell the OP to keep a balance from one month to the next, which would, as you say, accrue interest. I told the OP to wait the statement cuts, and then PAY IN FULL - which means that the payment is applied during the grace period, and NO interest accrues. This is a different take on what DMC suggested earlier. To summarize the options, using my utility bill suggestion as an example:
charge utility bill to card / pay in full before statement cuts = CC reports $0 balance, no interest charged / to the credit bureau it looks as though card was never used / no basis for evaluating customer’s ongoing ability to use credit responsibly
charge utility bill to card / pay in full after statement cuts = CC reports a balance equal to the bill, no interest charged if paid during grace period / credit bureau sees low-key usage of card / customer shows ongoing ability to use credit responsibly
charge utility bill + a bunch of other things to card / partial payment after statement cuts = CC reports ongoing balance, interest is charged / credit bureau sees continuous use of card with less than full payment / depending on utilization, customer can be okay OR can be raising flags about ability to pay off debt
I have been suggesting option #2. You don’t seem to be aware that such an option exists, but it is there, and can be used to your own personal advantage.
[QUOTE=saoirse]
No one can say why anyone would have a higher credit rating for borrowing money when they don’t need to, though. I don’t need a car loan; I’ve paid mine off, and the car runs fine. The mortgage is nopt my problem anymore, except that I provide some of the money.
[/quote]
Have you been in the job market lately, or expect to be? More and more employers require a credit check as part of the screening process, even if you won’t be involved in handling money, because your score is perceived (rightly or wrongly) as a measure of your reliability.
How’s your car insurance rate? Did you know that insurance companies use your credit score to help determine just how much of a risk on the road you are?
Are you sure you’re going to live the rest of your life in the home that you’re in? Even moving to an apartment requires a credit check these days. How about buying a replacement for your car when it finally conks out?
[QUOTE=saoirse]
Funny thing is, my father was always really good with finances. He never used a credit card unless he had to, and always seemed to get car loans and mortgages just fine. In fact, I remember when the utility company would not take credit cards for payments. So obviously this is a pretty recent development.
[/quote]
Yup, the way your father lived is a thing of the past. People weren’t even allowed access to their own credit reports until the past 15 years or so. But it’s a new ballgame now, and it behooves everyone to have some understanding of it, because the CC companies WILL take advantage if you let them.
[QUOTE=niblet_head]
Because the lenders have decided that the way to judge if you will pay in the future is if you have paid in the past.
[/QUOTE]
Yes, but still no reason for it. It’s just dumb, and it apparently doesn’t work.
[QUOTE=Jean Gray]
Thanks, niblethead, for filling in some info for me.
You say this, but then you say this:
Which shows that you really don’t get it..
[/QUOTE]
Well, you have to make up your mind. Is it better to borrow money when you don’t need to, or isn’t it? You said above that there’s no reason to play this game. Now you turn around and say it’s crucial to getting a job, in addition to getting a car loan or a mortgage. I don’t care which story you want to tell, but it’s got to be one or the other.
[QUOTE=saoirse]
Well, you have to make up your mind. Is it better to borrow money when you don’t need to, or isn’t it? You said above that there’s no reason to play this game. Now you turn around and say it’s crucial to getting a job, in addition to getting a car loan or a mortgage. I don’t care which story you want to tell, but it’s got to be one or the other.
[/QUOTE]
I have to say that I have no idea what the hell you’re talking about now. Are you deliberately being obtuse, or are you naturally this dense?
Quote me where I say that “there’s no reason to play this game.” Please. No paraphrasing, the actual words. Because from the beginning, what I’ve been talking about is being proactive and working the system to your advantage, rather than being a lump and just letting stuff happen to you.
niblet_head and I have been trying to explain to you how the credit scoring system works in this country. Your eminently mature reaction is to repeatedly say you think it’s dumb, and to imply that I at least am just making shit up. Fine, you can think that. But so much for “fighting ignorance,” eh? :rolleyes:
On the off chance that there might be some people interesting in having more than my word for it, there is some good basic info to be found here:
http://money.howstuffworks.com/credit-score.htm (look especially at the section on improving scores)
http://www.investopedia.com/articles/00/091800.asp?partner=answers
[QUOTE=saoirse]
Yes, but still no reason for it. It’s just dumb, and it apparently doesn’t work.
[/QUOTE]
Cite where it doesn’t work.
Jean, haven’t you noticed that some people just like to argue? That happens on this board as well as out in the “real” world.
I think people who ask us to prove things, to provide sources etc., are being silly. In the first place if they cared about a subject they would already have found out. In the second place, they can do their own research if they have a sudden interest. The demand for sources (which are just other people’s opinions) and the constant arguing and misquoting are, IMO, just people being aggravating. Too many people confuse argument with discourse.
Hi. I’m not saying I’m an expert on credit or anything, but I work for a debt counseling organization and the stuff Jean Gray is saying here is pretty much the basic training curriculum for anyone who works at my job.
[QUOTE=Jean Gray]
Nope, that’s not right. Your debt-to-income ratio is the amount of money you spend “maintaining your debt” (that is, the minimum payment required) vs. your monthly income. DTI does NOT take your total available credit into account at all.
[/QUOTE]
[QUOTE=saoirse]
Yes it does, at least at the companies I developed for. If you have a 50k total credit limit, it takes into account the minimum monthly payment that would be required if you maxed out that 50k, regardless of your actual balance. You can choose to continue to disagree, but I’ve personally written the algorithms in various software applications used by lenders. This is far from a universal practice, but in the private student loan industry, it’s certainly used by several companies. Their argument is that the second you are accepted for a loan, you could turn around and max out your credit lines. Your disagreement actually prompted me to go look to see if there were any legal standards for this (I even dusted off my nightmarish Regulation Z booklet in the process), but I can’t find any that require nor disallow either method.
[/QUOTE]
I think the basic conflict here is you are talking about two different standards of judgment. Jean Gray is talking about how credit bureaus determine your FICO score. Utilization is a cut and dry ‘‘total debt/total credit line’’ ratio.
[QUOTE=www.myfico.com]
-30% [of your credit score is affected by] Utilization. It is best to have several accounts with low balances distributed then it is to have fewer accounts maxed out. To figure utilization: Balance (divided) by Credit Limit = percentage. Lower than 10% recommended per account, this is one of the fastest means for increasing the over all credit score.
[/QUOTE]
here: Credit Scoring 101
saoirse, however, is talking about the lending industry and the individual standards created by lenders in determining whether someone is economically solvent enough to get a loan. I don’t work for a lending industry, so I wouldn’t know… but what is absolutely clear is that credit card companies, banks, and other lenders calculate economic solvency in a different way than FICO does, though the score factors into it. FICO’s bottom line is, ‘‘How responsible are you with credit?’’ Lenders’ bottom line is, ‘‘How much money can we make off of you?’’ Those people with high balances that always pay their minimums and gobs of interest are infinitely more useful than those who do the truly responsible thing – pay beyond the minimum, or the full balance whenever they can. So while the FICO score is a tool that lenders may use to determine to whom they should lend, it’s not necessarily the final word on who gets the loan.
II think saoirse is accurate in saying that the whole thing is monumentally stupid. Credit repayment history, which makes up a large part of one’s FICO score, makes a lot of sense. Util is one of those measurements of credit that few people know about. I think the basic notion behind it, from a lending point of view, is that they want to be sure someone isn’t maxing out their credit cards. When it gets weird is when responsible people pay off a $7000 debt or whatever and then close the account, with no idea whatsoever that they’ve just damaged their credit by raising their Util ratio. A lot of the stuff that goes into calculating a FICO score does not strike me as ‘‘common sense’’ and some of it seems downright arbitrary (diversity of accounts, for example.) It’s true that we have to learn to play the game because there’s nothing we can do about it… but it doesn’t make seem any less stupid to the average consumer.
[QUOTE=Sprockets]
Jean, haven’t you noticed that some people just like to argue? That happens on this board as well as out in the “real” world.
I think people who ask us to prove things, to provide sources etc., are being silly. In the first place if they cared about a subject they would already have found out. In the second place, they can do their own research if they have a sudden interest. The demand for sources (which are just other people’s opinions) and the constant arguing and misquoting are, IMO, just people being aggravating. Too many people confuse argument with discourse.
[/QUOTE]
And many people confuse opinion with fact, which is why we request people to back up their unsubstantiated opinions with something more than the contents of their lower colons.
And yes, people on this message board like to argue. It could be stated (and probably not get a lot of contrary opinions expressed) that arguing is the primary reason most of us hang out here. Arguing with informed persons of another point of view is fun and tends to expand one’s view of the world. The key word here is “informed.” Arguing with the uninformed for the average Doper is about as much fun as fucking virgins–no challenge, and you’ll never learn anything new from them. There is a bit of intrinsic fun involved in popping the cherry, metaphorically speaking, but not enough to keep most of us hanging around. So yes, we DO request that the chowderheaded back up their assertions with anything they can find in the way of FACTUAL information. That you equate all sources with “other people’s opinions” kind of lets me know that you don’t actually understand the difference between opinion and fact–which is where this post of mine started.
Just to make it clear, if you go into an established society and expect that it will change itself to suit your preferences you will be doomed to a life of constant disappointment–but I surmise you’re already figuring that out.
Gee, too bad the real world doesn’t have ignore lists, huh?
[QUOTE=niblet_head]
Cite where it doesn’t work.
[/QUOTE]
How about the fact that the comapnies using these scores have lost more moeny than the GDP of most of the nations of the world?