How do you build up good credit?

[MellowDrama]

How do cred. card companies decide to whom to extend credit? They keep on raising the limit of my cards so that I have one over $50K , and I don't even have a job! :lol:

[SunWuKong]

be in debt but always pay everything on time.

[Napoleon Chynamite]

Crap...I've always been following the buy-nothing-therefore-owe-nothing plan of attack.. :frown: :lol:

[ism]

Getting close to your limit consistently will cause them to raise it, provided you're paying your bill.

Another easy thing to do is call them, tell them you're going on vacation, you'll be using your card, and you can squeeze a few hundred out of that.

It's so nice to know credit card companies are willing to drive Americans into debt.

[VV o n g B a]

u can also talk them into lowering your interest rate if u are a student thats going into medicine or law or something. but u have to use the card for a little while before that happens.

[himura-dono]

let it go a month or two and then suddenly pay the entire card off...flounder about getting rid of it, and they'll jack it up.

[wwz]

as long as you pay your bills consistently they'll raise your credit, after all its to their advantage to have you owe more money
you can get them companies to lower your interest rates if you just call and tell them you want to cancel the card, or just straight up say youre having financial problems. i got my mastercard down from 18% to 7% which is pretty good.

[kimpossible]

I believe they check with three standard credit companies, one being Equifax. Equifax will have a record of you including debt and assets. I've seen my credit report a few times but I don't remember if anything else would be included on it. Certain actions will give you either bonus points or penalty points. I think your basic credit check is a calculation of these points and you get rated.

You can do all those things regarding bill paying techniques but really the best way to increase your credit is to have assets greater than your debt. Especially when applying for a mortgage.

[jimbo]

I've had loads of credit card companies e-mailing me saying that I've already been pre-approved for numerous cards with high credit limits.

Shame I'm not a U.S citizen though and have never set foot in the country. :D

[teaz0r]

pay your bills on time. and pay atleast the minimum.

it starts from small things even, cell phones, pagers,
just need to pay bills on time, builds positive references
on your credit report.

credit cards are one of the strongest credit references.
again. paying it on time, over a period of time. if you
can't get a credit card or are always rejected get try
to get a "secure" credit card. those are the ones that
require a deposit, and the spending limit on the card
is usually equal to the amount of the deposit, you might
be able to overdraft 10% or sumthing. depending on
the financial instituition.

if you totally fuck up and your debt gets out of control
don't move or change your name, just seek a financial
counselour.

yes. this is from the girl that gets a credit extension
everytime she hits her limit. sadness. i am citibank's
bitch.

[AltimaGTR]

Building good credit starts with getting the Uber expensive sports car you've always wanted and making payments of $800 a month for 5 years.

But if not, then I think having a checking account and regularly writing checks will help.

[snuffles]

okay. here's what i've learned after working for fair, isaac... (they're the guys who came up with the whole concept of a credit score in the '70s and are now milking that nice cash cow...)

- there a 3 credit bureaus: equifax, transunion, and experian. any company who gives credit/loans can report to any/all/or none of the three. usually, the larger companies report to all 3. smaller ones might report to only 1. it has to do with what they negotiate with the bureaus cuz the companies use these bureaus to get information about their customers (what are they doing with their other accounts) and in return, they report the information they have to the bureau.

- all 3 bureaus use the same score mathematically. so, IF you have the same records at each bureau (called tradelines), then your credit score should be the same at all 3. (this score is called teh FICO score, btw...) differences arise in scores between bureaus when accounts aren't reported to a certain bureau... or there's a recording error (which happens quite a bit, sadly...)

- the FICO score is a mix of things - its kinda like a really huge tree of logic that tries to figure out what's the best way to assess a person's credit risk based on what their accounts look like. It's a point system, where there are different things they look at and give you points on. The points are rewarded so that your "score" gives companies an idea of your credit riskiness. The formula is log-linear, such that at a score of X, there a Y good accounts for every 1 bad account, where as X gets higher, Y gets higher. Things they look at are shtuff like: how many lines of credit/loans do you have, what's your utilization, how old are your accounts, have u been delinquent, how many times have you been delinquent, what was your maximum delinquency, how many tradelines have you been delinquent on (yes, delinquency is a pretty big matter, but there are a gazillion other things they look at too)

- in general, pay on time and don't carry too much debt in comparison to your savings/income cuz they see your bank accounts...

- as for once you have a credit card... there are other "scores" that companies will create to assess your risk once they've got you, looking at more information than is reported to the bureaus, like your payment and spending patterns each month. some companies run really complicated strategies to analyze their accounts, others run REALLY simple shtuff. in general, most companies are strong in some areas and weak in others, so u get credit card offerings/increases/other changes to your account that make you go "HUH? Why would they do something silly like that?" But whateverz, its their fault if they didn't come up with a decent strategy before marketing it... they''ll have to pay for it later.. and hopefully learn...

ugh. okay. i'll shut up now. i just live and breathe credit analyses so i can go on and on....

if you're curious about your credit report, you can usually buy one for pretty cheap (max probably around $12) or get it for free (some states allow you to get it for free once a year.. i think nj is one of them) online. just do a search. if you're making a big purchase (like house or car), it's usually pretty smart to check your credit report and fix any mistakes on it before getting the mortgage/loan... it can drastically reduce your interest rate....

[moschikat]

Originally posted by pipSy@Feb 19 2003, 03:36 AM


yes. this is from the girl that gets a credit extension
everytime she hits her limit. sadness. i am citibank's
bitch.
ditto! :HH:

[ism]

Originally posted by snuffles@Feb 19 2003, 11:33 PM
The points are rewarded so that your "score" gives companies an idea of your credit riskiness. The formula is log-linear, such that at a score of X, there a Y good accounts for every 1 bad account, where as X gets higher, Y gets higher.

Mmmm algorithms... :luv: :luv: :luv:

Very nice explanation. Thanks.

[contra_diction]

i'd really like to get a credit card, but not having any established credit hella sucks. everybody says, insufficient credit history. but recently, they've also been saying recent and/or excessive amount of credit requests. how else am i supposed to get one? also, i tried to get a cell phone a few months ago. They wanted about a 500 to 800 dollar deposit cos of my lack of credit. how can i establish it if it requires it's already established in order to establish? eh?

[ism]

Credit card applications are submitted to the credit agencies and they count against your FICO score. It looks like you need lines of credit urgently and are a credit risk. If you can, get a secured credit card or get a co-signed card to start your history.

[Commando_turned_MD]

Originally posted by VV o n g B a@Feb 18 2003, 10:57 AM
u can also talk them into lowering your interest rate if u are a student thats going into medicine or law or something. but u have to use the card for a little while before that happens.
correct