🧑‍🤝‍🧑 / 🏡 An intriguing thing I overheard today about building credit...

[TerryP]

...which actually made some sense in the short term.

Chick bragging about how many credit cards she's been approved for, right? But, she followed that with "my percentage of debt versus credit availability."

I'll admit. I stopped for a minute and said .... I had nothing to say.

 

[Krimson]

...which actually made some sense in the short term.

Chick bragging about how many credit cards she's been approved for, right? But, she followed that with "my percentage of debt versus credit availability."

I'll admit. I stopped for a minute and said .... I had nothing to say.

Almost like the creditors and the credit bureau are in cahoots or something.

 

[It Takes Eleven]

...which actually made some sense in the short term.

Chick bragging about how many credit cards she's been approved for, right? But, she followed that with "my percentage of debt versus credit availability."

I'll admit. I stopped for a minute and said .... I had nothing to say.

Utilization rate. Outstanding balances as a percentage of credit limit. If it's 30 percent or less, it's favorable. If you're maxed out at $3,000 on a single card, and you get two more $3,500 cards, you're at or below 30 percent. It's a fix, or you can just pay $2,100 on the existing card.

That being said, the age (vintage) of credit relationships factor in, so the two new accounts will pull that lever in the opposite direction, but to a lesser degree. I refinanced my Georgia house mortgage to build my first lake house, and I kept that 15-year, three percent loan for thirteen years. The servicing was sold four times, five different lenders, and each time the ridiculous credit bureaus showed it as new credit. Paid the last bit when I sold it last July.

The biggest negative is payment history. It trumps everything beyond default and bankruptcy. I'll admit that when I build my retirement house I went over budget over $100,000 and I had a four month slog to get my cash flow in line. I was stubborn and refused to borrow more, and had some credit card delinquency for about 60-90 days. I knew my cash flow would cover it, and knew that I wasn't planning to borrow for anything else, so I took the hit. Depending on the reporting agency and the pull, that's eventually dropped off and I'm back over 800. Even so, Chase still doesn't like me.

 

[OldPlayer]

If you can get approved for multiple cards, it increases your spending power. If you can get approved for multiple cards and don't use them, it helps your credit rating. The problem is people get the cards and then max them out and don't pay them off or keep a balance (not good).

 

[TerryP]

I'm back over 800.

How much does DTI weigh in there?

 

[It Takes Eleven]

How much does DTI weigh in there?

That's more of an individual lending decision, the whatever 36-42 range, because it's prospective debt, not existing encumbrance.

 

[TerryP]

That's more of an individual lending decision, the whatever 36-42 range, because it's prospective debt, not existing encumbrance.

makes sense

 

[It Takes Eleven]

makes sense

Dude. I make sense, from a financial/underwriting/regulatory perspective. It's my drinking buddies where I get sideways...