TTMA Credit
Aug 21, 2015 12:13:16 GMT -5
Post by pismoduo on Aug 21, 2015 12:13:16 GMT -5
Aug 20, 2015 21:17:09 GMT -5 @led said:
Why stay away from department store credit cards? I don't shop anywhere enough to warrant one, but why?We were debating trading in our car and getting a loan to give us enough credit history to get a credit card later. What would be the point of taking out a car loan on a car that's already paid off? How does that even work?
Your credit score is made up of a few different components, a few of the biggest are:
1) Debt to Credit ratio. It is great if you have a high credit limit (across all credit cards or lines of credit) and don't use much of it each month. Example you have 2 credit cards with a total credit limit of $10,000. If you spend $2,000 a month that would be a low utilization rate and would be seen as a positive for your credit score. The opposite is also true in that if you use too much of the credit available your score will go down.
2) Length of credit history. I would caution you against opening up too many lines of credit at the same time because you will have a lot of "new" credit without a history. This is something that is largely out of your hands because you can't go into the past to open up a credit card. This is also why it isn't always a good thing to close down a credit card after it is paid off. It is best (assuming you don't have a spending/debt problem) to just stop using it.
3) On time payments. A history of on time payments does wonders for your credit score.
There are some other things factored in (bad debt, bankruptcy, liens, etc.) but if your low score is due to lack of credit this shouldn't be an issue for you.
Some people also think that you need to carry a balance on a credit card and make on time payments to build your score. That is NOT TRUE. You do need to make on time payments (duh) but you can pay the entire balance off. The only thing they are looking for is ON TIME. Paying in full has the added bonus of keeping your debt to credit ratio low.