CREDIT CARDS!!! | Page 2 | FerrariChat

CREDIT CARDS!!!

Discussion in 'Other Off Topic Forum' started by Schnelles Fraulein, Dec 29, 2003.

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  1. Schatten

    Schatten F1 World Champ
    Owner

    Apr 3, 2001
    11,237
    Austin, TX
    Full Name:
    Randy
    one other thing which you might already know - if you apply for a loan or even a credit card, and you are declined, they will send you a piece of paper (even a financial institution will do this) which states "generally" why. with that sheet, it *should* have instructions on how to call one of the three credit bureaus to get a free credit report within 30 days of being declined. this will give you a good chance to look into what is going on with your credit report. some of the items will not be able to be explained as easy as others, but try to understand the most you can - ask questions, and disupte what you can.
     
  2. darth550

    darth550 Six Time F1 World Champ
    Lifetime Rossa

    Jul 14, 2003
    60,788
    In front of you
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    BCHC
    You have to be invited by AMEX, sponsored by another member who has one and a minimum 6 figure annual spending history.

    DL
     
  3. Napolis

    Napolis Three Time F1 World Champ
    Honorary Owner

    Oct 23, 2002
    32,118
    Full Name:
    Jim Glickenhaus
    Darth
    That is not correct, nor IMHO is there any advantage to having one.
    Sasha
    When you come by to look at my P4 bring all of your information.
    I may have an idea or two.
    Best
     
  4. Texas Forever

    Texas Forever Seven Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    75,396
    Texas!
    Jim: I agree on the Black card. I have a Platinum for over seas travel and the use of airline lounges in the USA. So, I kinda break even on the annual fee. But a Black is over the top. Besides you have to make a certain bling bling score before AMEX will let you have one, which lets me out.

    Sasha and others: Credit is something that has to be activitly managed. When you are young, get a card (used to be Sears was the hardest to get) and always pay on time. When you are older and self employed, dealing with lenders becomes your second job. There have been times when I have been in technical default on millions in debt only to have the bank lend even more money. The key is to have a good track record. So instead of using $300 to get a secured card, Sasha, you may want to consider paying off the old defaulted debt. Just a thought.

    DrTax
     
  5. F SPIDER

    F SPIDER F1 Rookie
    Owner

    Jan 30, 2002
    2,873
    NYC, A'dam, W'stock
    Full Name:
    rijk rietveld
    No credit history is just as bad as bad credit. When I moved to the States, I could not get a credit card. So, I got an AE card. One year later I learned to my surprise that AE does not count, since it is seen as a debit card. It was impossible to get a start. I could not even get a car loan. Then someone suggested to get a Macy's card, use it for a year and than apply for a Visa. That finally worked. I understand that getting a secured card will do the same.

    My FICO score is now 731 and my wife's is 734 (anything over 680 is excellent) and cannot stop the credit cards offerings from coming.

    Rijk
     
  6. Napolis

    Napolis Three Time F1 World Champ
    Honorary Owner

    Oct 23, 2002
    32,118
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    Jim Glickenhaus
    Sasha
    The good Dr. is right. A good place to start may be with an advisor. Check with your friends for a local accountant. These things can be fixed but you must stay on track and working out the old debt is a good idea.
     
  7. TimN88

    TimN88 F1 Veteran

    Jun 12, 2001
    5,045
    Northeast
    Full Name:
    Tim
    You probably have alot more to lose than me though. I should get a credit card though. I need to start building credit and i whould have alot more protection if i were to lose it.
     
  8. jimpo1

    jimpo1 Two Time F1 World Champ
    Owner Silver Subscribed

    Jul 30, 2001
    24,510
    Dallas, TX
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    Jim E
    I'm an AmEx junkie. When I was just staring out and no one would give me a card, they did. I learned by carrying that card to pay it off every month. Not long after, I asked for a gold card to feed my ego. They gave me one! I was maybe 23. I've been a loyal member ever since. Then I married a woman that worked for them, and now I get to take advantage of their stock too!
     
  9. bostonmini

    bostonmini Formula 3

    Nov 8, 2003
    1,890
    Guys, just a general question, I have paid for things in cash my whole life or borrowed credit cards from my parents when i needed them...what is the best thing to do to get started with no credit history? go straight for the black?:) hehe. btw, what is the annual fee for that?
     
  10. Mitch Alsup

    Mitch Alsup F1 Veteran

    Nov 4, 2003
    9,252
    Here is how the game is played to success:

    A) Obtain first credit card.
    B) run up some debt
    C) make payments to cover load
    D) pay off the debt
    E) credit card company increases limits

    I can buy a small car on the my credit card ($25K limit). And, by the way, I only carry one credit card. What do I really need with several cards with $25K limits on each of them?

    It seems you forgot either rules C) or D).

    Pay off you current debt, and live without until you can keep the debt managable (e.g. near zero).
     
  11. jimpo1

    jimpo1 Two Time F1 World Champ
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    Jul 30, 2001
    24,510
    Dallas, TX
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    Jim E
    I would disagree w/ Mitch about 'running up debt'. I've never had any debt other than house, any my credit is stellar. I've never carried a balance on a card for over 45 days. Get a card and use it responsibly. If you pay on time, the credit agency will show that. My AmEx shows on my credit report and it gets paid off monthly.
     
  12. Schatten

    Schatten F1 World Champ
    Owner

    Apr 3, 2001
    11,237
    Austin, TX
    Full Name:
    Randy
    Mitch, I worked on an automated underwriting system for lending a few years ago. While integrating part of it with a company in Dallas which is essentially a credit bureau aggrigation system, they basically stated: we have a lot of information, and we can't do anything with it, but in the end, the magic number is 5 - that's right, five pieces of plastic revolving credit. Sounds like a lot, but for whatever you want, that would be it. Sometimes it isn't the amount you can borrow, but also by how many institutions trust you with borrowing from their pocketbooks.
     
  13. mfennell70

    mfennell70 Formula Junior

    Nov 3, 2003
    579
    Middletown, NJ
    I dunno. My FICA was just under 800 last I checked. I've never had more than two credit cards.
     
  14. Schatten

    Schatten F1 World Champ
    Owner

    Apr 3, 2001
    11,237
    Austin, TX
    Full Name:
    Randy
    the FICO number is separate. but also, to get a perfect or near perfect score, this is just the ideal. if you don't believe me, I don't have a problem with it. it's only information that was obtained by working with the aggrigation center. they basically take the three credit scores and normalize them, and make them legible, parse through that information for whatever kind of information is necessary to poll.
     
  15. true

    true Guest

    I agree with Jimpo1...I've been told this theory many times in the past. I've had friends and others tell me 'get a credit card make some purchases and then after a few months and some minimum payments start paying it off...' This appears to be a common misconception, and of course I would be willing to bet the person who told them doing this will build fast/good credit was the card issuer representative or another mis-informed friend. Wanting to dispell this myth personally, I called a few credit card agency's central offices and asked them if credit is built quicker by not paying off the entire credit line monthly ; they ALL told me that it didn't matter. I've never payed a cent of interest. I pay both of my credit cards off in full every month and feel that these 2 cards would be enough to get me solid credit. I was able to easily get a mortgage on a rental property without any questions. Can anyone with some good data recommend a good amount of cards to hold, of one can properly manage funds?

    For a datapoint on the 'Black card', the company I work for has a client who uses one with us.....we recently charged $86,000 in a single shot! Pretty impressive. :)
     
  16. f355spider

    f355spider F1 World Champ
    Owner Rossa Subscribed

    May 29, 2001
    17,913
    USA
    This got me thinking that I probably have too much available credit...that is, I never carry a balance (never paid interest in my life on a card) but have a lot of cards. I just cancelled two tonight (over 30k of available credit), and the guy said the ideal number of cards to have is three. FWIW.

    I am going to order up a copy of my credit report and go through it and make sure all the info is correct, and close unused credit card accounts, and just do a general 'cleaning' of my credit report...never done it before, but couldn't hurt. Thanks guys!
     
  17. Spasso

    Spasso F1 World Champ

    Feb 16, 2003
    14,648
    Land of Slugs & Moss
    Full Name:
    Han Solo
    For those interested in monitoring ones credit report on a regular basis you might try the Creditnotify program. I got it through my AT&T card and costs 9.99 a month. Thirty bucks a quarter.

    I am sent a credit report every quarter plus I can check it any time on line through a secure link.

    If any abnormal credit activity appears, like taking out a large loan or buying a Ferrari with your credit card, a letter is immediately sent out notifying the card holder of the activity.

    DJ
     
  18. MikeZ_NJ

    MikeZ_NJ Formula 3

    Dec 10, 2002
    1,533
    Southern NJ
    Full Name:
    Mike Z.

    From what I've read, it not only doesn't hurt your credit if you have a card that you don't use on there, but it actually can count AGAINST your credit if you cancel a card. It's generally best to leave them open and unused.
     
  19. mbmike

    mbmike Formula Junior

    Oct 31, 2003
    752
    My parents had a card that the bank cancelled on them because they had not put a single item on it in a veeeery long time (a couple years, maybe). Would that negatively affect your credit score?
     
  20. rodsky

    rodsky Formula 3

    Mar 24, 2003
    1,601
    Los Angeles
    No
     
  21. f355spider

    f355spider F1 World Champ
    Owner Rossa Subscribed

    May 29, 2001
    17,913
    USA
    MikeZ,
    We may be moving into the realm of speculation now. :) How can cancelling a card by the user be looked at negatively? Cancelled by the ISSUER sure (depends on the circumstance; in Mbmike's instance his parents account was closed due to inactivity, doubtful that would be a negative). I have a booklet I printed out from TrueCredit (transunion) and you actually get dinged each time you open a new credit account of any sort. Too many credit card accounts can definitely go against you and be looked upon negatively. If you are right, and closing them is looked upon negatively, I would think that is only temporary, at best. Since you are improving your overall "open credit" versus "income" ratio.

    What we are delving into is the rather secretive area of "credit scoring" and I would love to know the exact details of how they do that. Here is a short note from the Federal Trade Commission:
    http://www.ftc.gov/bcp/conline/pubs/credit/scoring.htm

    Here is a link that actually gives you some relevant info on credit scoring:http://snipurl.com/3m5n it does show that having a lot of available credit is not always good...an example of having 10 credit cards with $10k of available credit ($100k).

    I'm no expert, but plan to "google" more information and get a credit report on myself and see/correct errors if I find them (not easy from what I have read so far).
     
  22. MikeZ_NJ

    MikeZ_NJ Formula 3

    Dec 10, 2002
    1,533
    Southern NJ
    Full Name:
    Mike Z.
    dave,

    Yes, credit scores are very strange things; no one knows exactly why/how they're calculated. Much of the information available to the public is speculation. However, directly from the mouths of Fair, Isaac & Co., the company who calculates the FICO scores:

    "Closing credit accounts can never help a credit score and might hurt it."

    http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/02/23/BU116376.DTL

    For more reading on credit, scores, etc, here's some more links:

    http://www.creditnet.com
    http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=158558
    http://www.fatwallet.com/forums/messageview.php?start=20&catid=52&threadid=176104
    http://www.fatwallet.com/forums/messageview.php?start=0&catid=52&threadid=159097

    Good luck getting more info on credit - it can be a nightmare at times, but I tend to enjoy it. :)

    -Mike
     
  23. MikeZ_NJ

    MikeZ_NJ Formula 3

    Dec 10, 2002
    1,533
    Southern NJ
    Full Name:
    Mike Z.

    Forgot a couple things in my last post...

    In terms of "temporary" dings, any drop in your credit score could be considered temporary, since (all other things being equal) your score will go up with time.

    My understanding is that your "open credit to income" ratio is not nearly as important as your "credit to debt" ratio. Again, it depends on the number of cards you have, history, etc. Nothing's set in stone.
     
  24. f355spider

    f355spider F1 World Champ
    Owner Rossa Subscribed

    May 29, 2001
    17,913
    USA
    Mikez,
    Great links, thanks! In reviewing that article, it would appear that my closing accounts has basically done nothing, either good or bad in my case. Since the FICO is based (partially) on the ratio of credit available versus credit used, I haven't changed much, since I carry no balance on any of my credit cards, they are all paid off(thus my ratio really hasn't changed). I also have no other debt other than the last bit of my mortgage to pay off. Which in itself is not a great thing, since they like to see a nice balance of various debts (home, car, maybe a home improvement loan) all being paid back in a responsible manner, which develops a nice history.

    In fact, in my case, the only debt I have ever had is my house, since I pay cash for everything, or in the case of a credit cards, pay the balance each month. From what I am reading, this is not terribly good at improving your credit worthiness score. Doesn't make it bad, but not a "plus" either.
     
  25. ART360

    ART360 Guest

    What is the AMEX black card? What advantages does it have, and what are the requirements to get one. The upgrades sound pretty good.

    Art
     

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