I'm young and want to build my Credit Score

[Kosher Ham]

I'm gonna take both of your responses to mean that for old fogies, American Express is synonymous with a charge card.

Haha, you senile citizens.

But then again, I missed out on truly appreciating Gibbs I.

You getting an AMEX credit card is no different than getting a MC or Visa, or even a store credit card.

Haha, you dumb kids. Paying interest on stuff you already have the money for. And yes you missed out on Gibbs one, and RFK. No wonder the banks are in trouble.

:doh:

[Shilsu]

You getting an AMEX credit card is no different than getting a MC or Visa, or even a store credit card.

Haha, you dumb kids. Paying interest on stuff you already have the money for. And yes you missed out on Gibbs one, and RFK. No wonder the banks are in trouble.

:doh:

:doh:

I said I never carried a balance so how would I be paying interest? Way to be oversensitive and overreact.

:doh:

[Kosher Ham]

I am certainly far from being sensitive. You carry a daily balance on "credit cards" until the bill is paid.

Guess you didn't realize that.

[MoeRedskins]

No you wont. A zero balance does nothing for your score.

Screw the score, why pay more in interest and fees? But that kind of makes no sense. I mean, for the CC companies it does b/c it allows them to give an excuse for having you carry a balance so you have to pay the interest rate, but as a consumer it makes no sense.

[Shilsu]

I am certainly far from being sensitive. You carry a daily balance on "credit cards" until the bill is paid.

Guess you didn't realize that.

Don't be an idiot. You don't pay interest on a balance you don't carry month to month. Well, what can you expect from a guy who assumes people are talking about charge cards in a thread about credit cards. :doh:

[PleaseBlitz]

Screw the score, why pay more in interest and fees? But that kind of makes no sense. I mean, for the CC companies it does b/c it allows them to give an excuse for having you carry a balance so you have to pay the interest rate, but as a consumer it makes no sense.

Look at the thread title. The OP's concern is building his credit score.

[Kosher Ham]

Don't be an idiot. You don't pay interest on a balance you don't carry month to month. Well, what can you expect from a guy who assumes people are talking about charge cards in a thread about credit cards. :doh:

Talking about credit scores...not credit cards.

Read up son, it will help.

Daily balance, check it out.

[Shilsu]

Talking about credit scores...not credit cards.

Read up son, it will help.

Daily balance, check it out.

Do statement balance, grace period, and interest rates mean anything to you?

Don't post in this thread if you're going to throw out false information. Someone might actually believe your babble.

[Kosher Ham]

Do statement balance, grace period, and interest rates mean anything to you?

Don't post in this thread if you're going to throw out false information. Someone might actually believe your babble.

haha. Did I hit a nerve kid ?

What of what I have stated is false ?

Grace period ? Like paying your rent on the 5th when it is really due on the 1st ? Please explain.

A charge card is better than a credit card, plain and simple. For your credit and for your finances. Sorry you have a limit.

[Shilsu]

haha. Did I hit a nerve kid ?

What of what I have stated is false ?

Grace period ? Like paying your rent on the 5th when it is really due on the 1st ? Please explain.

A charge card is better than a credit card, plain and simple. For your credit and for your finances. Sorry you have a limit.

It's obvious you're an idiot about financial matters. Please refrain from posting in this thread if you have nothing to contribute. Thanks.

[techboy]

The idea that one should carry a balance month to month is simply wrong-headed. If you pay off the balance every month, there's still a reported balance on your credit report, unless you pay it before the statement closing date. Further, the good payment history is still reported.

I check my credit report fairly frequently, and never carry a balance or pay interest. I always have full marks for "paid on time" each month (usually little green boxes showing payment history for the past 24 months), and the statement balance always shows for each card, and it's not zero, it's whatever I owed when they cut the statement.

Specifically, consider this.

What many people don't know is that credit scores don't distinguish between those who carry a balance on their cards and those who don't. So charging less can also improve your score -- even if you pay off your credit cards each month.

Your credit-card issuer takes a look at your account once every month or so and reports the outstanding balance on that day to the credit bureaus. This snapshot doesn't reflect whether you pay off that balance a few days later or whether you carry it from month to month.

As to how to get a credit score up, here's something I posted earlier.

FAQ + discussion: GETTING, KEEPING high credit / FICO scores. Glossary, data points, utilization, etc. Updated 7/23/06 is a thread which directly addresses the issue in question, and has mounds of great information. I'd suggest reading the whole thing. Twice. DaveHanson is not a professional (I think he's actually a retired professor), but he is extremely knowldegable, and collects knowledge from everywhere.

The problem with FICO is that Fair Isaac jealously guards how the scores are derived as a trade secret, so no one really knows exactly how credit scores are derived, but that thread is the best collection of data I've come across. (I've done a lot of research, because I've been playing advanced games with my credit for about 6 months now).

Here's an excerpt from DaveHanson's thread:

SECTION TWO: GENERAL FEATURES OF CREDIT SCORING

A. Credit scoring models are intentionally ambiguous.

The three major credit reporting companies / agencies (CRC or CRAs) are Equifax, Experian and TransUnion. They are private, for profit entities. They all maintain the position that their scoring models are "trade secrets," and they fight tooth and nail to reveal as little as possible about their details. Moreover, they are regularly tweaked, in ways that are not publicized. This is one reason why there can be no reliable answer to precisely how much a certain factor would affect a given person's credit score. This also explains why there is so much misinformation floating around on credit scoring, even from journalists and others who should know better.

B. Scoring model complexity prevents extrapolation.

Theoretically, two identical credit profiles, when faced with the same pertinent change (a new line, late payment, whatever) should have their scores change in the same way. But in practice, no two credit profiles are ever alike. There are simply too many relevant factors. The age of each credit line, its type, its payment history, its size, the degree to which it's used, and many other factors are get put into the "black box" of credit scoring. When all these factors are considered no two people are really alike. That's why you should be suspicious of anyone claiming that "doing x will increase (or decrease) YOUR score by y points." There is NO WAY that they or ANYONE else could know that information.

C. Scoring Depends on Reporting--which can vary considerably.

First, if a credit grantor doesn't report the use of the credit, then it isn't considered in your score. Most business credit lines don't report to one's personal credit at all--which is why business lines can be a great way to "hide" use of credit. Most personal cards do report the limit, the balance (generally as of the close of the last billing cycle), and the minimum payment due (at that cycle close). A few do not. Capital One is probably the most prominent exception, reporting the "high balance" instead of the limit to the CRCs. Counter to popular belief, such exceptions are rather easily worked around, provided one knows they are there. (Note: Cap1 in particular is almost always willing to offer no fee balance transfers, and they will sometimes even offer "purchase checks" that allow you do deposit your CL into a bank account. Simply pay the balance off before the cycle closes, and your new "highest use" will be your credit limit, while your balance (which is measured as of the close) may be as low as zero.)

D. Scoring models and their key "inputs" are evolving significantly.

The ambiguity of scoring models and the changes in reporting mechanics complicates the tracking of changes in CRC scoring models. Even so, anecdotal evidence and occasional industry comments confirm that major changes have occurred over the past few years. Here are a few worth noting:

-Inquires are often sent to the CRCs much more quickly than previously. Years ago, it wasn't uncommon for all 5 inquiries made on a Monday to not show on one's report until Tuesday or later. Now, most of them will show up almost instantly. Needless to say, this has implications for credit application strategies. In particular, huge "App-o-Ramas" don't hold quite the attraction they once did.

-Secured revolving lines are more accurately reported AND less damaging than they once were. Along with the HELOC boom of the early 2000s came many consumers whose credit was badly hurt by their >50% utilization on their equity lines. Gradually, equity creditors began to more precisely specify their lines as "secured revolving," "heloc", and the like, rather than the simpler "revolving" that all CCs are coded. Also, CRCs began treating them differently, recognizing that high use of a HELOC (at the prime rate or thereabouts, and secured by real assets) was a much lesser risk factor for creditors than similar balances on credit cards.

-Multiple loan inquiries within short time frames are more often bundled. Not long ago, "rate shopping" for a mortgage or a car could really hammer one's score, since every inquiry by each lender one spoke with would knock it down another notch. Now, CRCs allow for multiple inquires for certain products (generally mortgages and car loans) to count as one, provided they are done within a 14 or 30 day period. This more lenient treatment does NOT apply to CCs, however.

One key point can be inferred from the observations in the last couple of sections. That is, DO NOT ASSUME THAT YOUR CREDIT SCORING EXPERIENCE DICTATES WHAT OTHERS WILL EXPERIENCE. I've seen MANY people make claims like, "credit scoring doesn't work that way--I know because it didn't happen to me." Well, THAT SIMPLY DOES NOT FOLLOW.

E. Scoring seems headed towards consolidation.

The big recent news in credit scoring is the arrival of the Vantagescore . Among other useful revisions, this score will use an "Identical scoring algorithm and leveled credit characteristics across all three national credit reporting companies." That will make monitoring one's score much easier, and using the score significantly fairer to consumers. There is debate over how long it will take before this revision is phased in. Thanks to ksd for pointing out that consumers can get access to this score for $5.95 (as of July 2006) at vantagescore.experian.com .

F. Scoring is always individual, not "joint".

Unlike income taxes, where spouses can file "jointly" as one unit, credit scores are always individual. So, a wife can pay a household's bills on time for 40 years, and if she's never established credit in her own right, it WILL NOT MATTER if her husband dies, and she needs to get a mortgage or buy insurance on her own! Thus it's crucial that every adult establish the credit that they might need IN THEIR OWN RIGHT.

SECTION THREE: RULES FOR KEEPING CREDIT SCORES HIGH

While the subject of credit scoring is quite complex, the most important "rules" for credit scoring are simple and well known. You don't know what magic formula will get you an "A" on a UNKNOWN professor's term paper. Yet you do know that bad grammar, misspelled words, the wrong subject, and missing the page limits will keep you from getting a high grade. And you also know that if you do a serviceable job of following the guidelines of the assignment, and make sure you observe any firm rules, you'll probably do OK. Well, credit scores are similar. Follow the rules, and you might not get "straight A's", but you'll do just fine--and soon will get "high pass" grades. (If you have already "broken" the BIG rules--e.g., a chargeoff, bankruptcy, et cetera--then you need a credit repair strategy first. Other forums like creditboards.com are better suited for this. Please note that this isn't meant as a brush-off at all--just an acknowledgement that (1) I'm less informed on such issues, and (2) credit repair really is its own subject, and (3) sites that specialize in these issues do a better job than we could here.)

So, here are the key "rules," roughly in order of importance:

A. Do not EVER pay late.

Paying bills late enough so that they report as "30 days late" or worse is quickest way to drop your scores. OTOH, if you don't have any late payments, and all lines are marked "paid as agreed", it's difficult to get much lower than the 600s, regardless of what else you do. If you need to beg, borrow, etc, to make payments on time, do so! Do note that being a couple of days late on a payment will almost never result in it being reported as "late"...OTOH, going oversees and forgetting to pay that last Visa bill before you leave probably will, so BE CAREFUL.

B. Keep your apparent credit "utilization" low.

BOTH the percentage use REPORTED to the CRCs (which may differ from what's actually USED) on EACH available line, AND the total (aggregate) percentage used across ALL your REPORTING lines, are the crucial factors here. The degree to which these respective factors will matter varies considerably. I'll offer my more subjective opinions below. But it's safe to say categorically it's best NEVER to go above 90% on any line, especially a large line--and never to go above 50% on all your lines combined. Below the 90% threshold, there's ample evidence that 50% is a key level, and somewhat less evidence that 70% and 30% are used as "break points" for credit scoring models as well.

C. Seek higher credit limits.

Since low utilization is always better for one's credit score, it follows, that given the same credit usage patterns, higher limits will always generate higher credit scores than will lower limits.

D. Keep your "credit quality" high.

The best accounts are a single home mortgage (ideally infrequently re-financed), and one or more major UNSECURED bank cards (Visa, MC, AMEX, Discover, etc.), and perhaps one or two store credit cards. Car loans, personal loans, more store credit cards, etc. need not be big negatives, but they generally will do more harm than good. SECURED cards are to be avoided whenever possible.

E. Cultivate a long credit history and an old average account age.

The more established your credit profile, the higher your score. This is determined primarily via the age of your oldest REPORTING line (closed or open; credit card or mortgage, doesn't matter) and the AVERAGE age of ALL your REPORTING lines. Of course, there is only so much one can do to change this...it's largely a matter of time. But there are techniques that help. For example, lines in which you are an "authorized user" (AU) will often (but not always) report on your credit file.

F. Avoid excessive "hard inquiries".

Most credit-granting companies, and some banks/brokerages/etc. will "pull" a credit report from one or more of the three CRCs. (Customer service reps are often unreliable on whether and which reports get pulled.) They then remain on your report from that CRC for two years. Having more than one or so of these at a time is a negative, and having too many (generally 5-7 or more) may disqualify you for a particular credit product. Generally, the significance of these as a credit scoring factor declines after they are 6 months old. Once on, they are difficult to remove. One loophole: "bumpage", which results from generating numerous "soft" inquiries through such means as pulling your own credit via commercial services like PrivacyGaurd and through the solicitation of "pre-approved offers by other companies. Bumpage can remove inquiries from Equifax or TransUnion, but not Experian.

Note that while a few issuers pull credit at more than one CRC (notably cap1, which does all three), most will do only one. However, IME it's often tough to predict which one of the three it will be. I'm frequently told it will be x and instead it's y. One reason monitoring is can handy is because it lets you know how your previous inquiries are "distributed." For example, if you have 6 recent inquiries, but only two per CRC, you're not in bad shape. OTOH if all 6 are at one CRC, it would be best to avoid new inquiries that would pull yet another one from that same CRC.

G. Avoid frequently changing your "official residence".

One factor that makes a minor but measurable difference is how long you've remained at one residence, with longer periods being better. You don't have to keep physically living at the same place, of course (not that it would be feasible for many anyway)--just keep the address you list as your "official residence" for credit, bank, etc. purposes consistant where feasible.

OK, now that we've discussed the key rules, let's move on to some well-proven tactics.

[artmonkforHOF]

First of all, your young but you do not want to build your credit score. Stop watching Suze Orman as she gets paid by the same people who created FICO.

What do you need a good credit score for? To purchase more things you can't afford? What a person your age should be doing is not looking to build your credit score but how do you start building your personal wealth. Start saving your money.

Any human should only have to take out a loan for 2 things in life:

1) your home

2) you education

most people add a car in there but if you have a good enough education then you should be able to purchase or secure a car without having to take out a loan. If you play your cards right, you might not even have to take out a loan to buy a home, and only have to pay off the student loan.

If you want to increase your credit score that means you will only be able to purchase more things and not be able to pay them all off. trying to pay off $1000 in CC debt while only making the minimum payments will take you over 17 years and cost you over $2,000 in interest. Why would you possible want to have a better credit score to get deals like this?

People promot credit like its a good thing, when in fact it's not, it's very bad. A lot of people think that if a bank gives you a CC with a $10,000 limit, then they can spend upto $10,000 and have no problem paying it back and then go off and screw themselves financially for the next ten years when they go buy that new plasma, blu ray player and MacBook.

[techboy]

haha. Did I hit a nerve kid ?

What of what I have stated is false ?

Grace period ? Like paying your rent on the 5th when it is really due on the 1st ? Please explain.

A charge card is better than a credit card, plain and simple. For your credit and for your finances. Sorry you have a limit.

Most credit cards have a "grace period" where, after the statement date, one can pay the balance in full and pay no finance charges. Usually it's 20 to 25 days, and represents the difference between the statement date and the due date.

I charge thousands every month to credit cards, but never pay any interest or fees because I pay them off within the grace period.

Effectively, I treat them like a charge card.

Charge cards are okay, but typically you have to pay an annual fee, which I don't like, though I do have a free Amex Gold I got when Fidelity was still subsidizing them.

And, actually, many charge cards are actually worse for the credit score, because in not reporting the limit, they substitute "high balance", which can lower your credit score by making the percentage of debt to available credit seem higher. Capitol One does this even with their credit cards (supposedly for "privacy" ), which is one of the shady practices mentioned earlier.

By the way, you may not realize this, but you have a limit too. They just don't tell you what it is.

[Kosher Ham]

Actually, I know I don't have a limit. Nor do I have a black card.

I do however pay an annual fee, but that is the price I am willing to pay for no interest, and many rewards.

[techboy]

Actually, I know I don't have a limit. Nor do I have a black card.

Actually, you do. You've probably just never hit it. You'd have to be a pretty big spender, but I've read some of the big spenders on flyertalk talk about it.

[sly]

First of all, your young but you do not want to build your credit score.

People promot credit like its a good thing, when in fact it's not, it's very bad.

The only way to qualify for a car loan or mortgage is to have a credit rating. I think I understand what you're saying, but having a credit card at a young age does not automatically mean the person will be irresponsible with it.

A lot of people think that if a bank gives you a CC with a $10,000 limit, then they can spend upto $10,000 and have no problem paying it back and then go off and screw themselves financially for the next ten years

This is an example of being irresponsible. On the other hand, if the OP gets himself a small credit card with a small balance, pays it off every month, he'll establish a good credit history and be well on his way. Credit cards are not to blame for debt, it's the people using them.

[techboy]

I do however pay an annual fee, but that is the price I am willing to pay for no interest, and many rewards.

Seriously, if your goal is to pay no interest, and earn rewards, you might be better off with one of the traditional credit cards paid in full every month.

I assume you're using Membership Rewards. If you're using those for airline miles, you might want to look at Amex's Starwood Credit Card, which offers Starwood points that can be exchanged at a 1.25 rate (25,000 miles for 20,000 points), and its annual fee is much lower. If not, you're likely better off with cash, like with the Fidelity Visa I have that pays 1.5% cash back into my Fidelity account or the Amex Blue Cash that goes up to 1.5% and 5% on gas, groceries, and drug stores.

There are lots more, and you don't pay interest if you pay in full each month.

It might be worth it for you to look around a bit.

[dockeryfan]

Actually, I know I don't have a limit. Nor do I have a black card.

I do however pay an annual fee, but that is the price I am willing to pay for no interest, and many rewards.

Actually, you do. Tell you what. Try to go out to dinner and charge like 2000 for a large group of people by using your American Express. You will be unpleasantly surprised. Your charge card most certainly has a spending limit. You just don't know it.

If you don't believe me, try charging everything on your Amex for a month. Gas, Groceries, hotel room, everything. When you get to a few thousand, I guarantee that some merchant will tell you it has been denied. When you call Amex, they will tell you that you have reached the limit you never knew you even had. Do an internet search if you don't believe me.

[laurent]

They show your monthly activity on a credit report?

Where?

On the online reports that I have seen it generally lists the account activity by showing within how many days payment was made on the revolving account (30/60/90).

It's also list an account status of current when payments on a revolving account have been received.

[techboy]

When you call Amex, they will tell you that you have reached the limit you never knew you even had. Do an internet search if you don't believe me.

Or, he can read the link I provided just above.

I've read that you can actually tease the limit out of them indirectly by calling and asking if they'd approve a certain charge, and just upping the number until they say no. Though they will still deny up and down that there is any such limit.

[Kosher Ham]

Perhaps, I am in a financial situation that doesn't have those issues. I charge everything to Amex, that I don't pay cash for.

[Corcaigh]

I just checked - my FICO score with Equifax is 802.

My credit cards are always paid in full and each of them show the average balance on my credit report. That balance is not $0

Imagine how high my FICO score would be if I took advantage of PB's tip?

Again, there is no need to not pay your credit card in full. Avoid the interest penalty even if it is only a few cents per month.

And regarding charge vs credit card. Like Techboy I have an AMEX credit card now. It has no annual fee, various perks and gives me real cash back each year (typically $600) not points to be traded for something I don't need. It does have a monthly limit but as that limit is $30,000 I can live with it.

[PleaseBlitz]

On the online reports that I have seen it generally lists the account activity by showing within how many days payment was made on the revolving account (30/60/90).

It's also list an account status of current when payments on a revolving account have been received.

Yes, i know. What is your point?

[PleaseBlitz]

I just checked - my FICO score with Equifax is 802.

My credit cards are always paid in full and each of them show the average balance on my credit report. That balance is not $0

Imagine how high my FICO score would be if I took advantage of PB's tip?

Again, there is no need to not pay your credit card in full. Avoid the interest penalty even if it is only a few cents per month.

And regarding charge vs credit card. Like Techboy I have an AMEX credit card now. It has no annual fee, various perks and gives me real cash back each year (typically $600) not points to be traded for something I don't need. It does have a monthly limit but as that limit is $30,000 I can live with it.

Do you have a mortgage?

[laurent]

Yes, i know. What is your point?

What's my point? You asked where it was listed...