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My credit went in the tank several years ago (illness/hospital/unable to work/loss of income) and now I’m earning minimum wage but canb’t resolve my past credit proble,s on a minoimum wage income. I have two adverse items which won’t even start to go away until resolved, and I can’t resolve them on my income. So I guess I can’t restore my credit.

As for the mortgage thing, I had high credit limits when I started looking at houses, with $0 revolving, since I always paid them off when I used them. I was told by my realtor AND my mortgage broker that I had to lower the limits on my cards or I’d have problems getting a loan. So while some of you may “think” it’s a non-issue, those in the know, that do this every day, say it is. Mind you, that was also 10 years ago before the sub-prime bubble. With the market being what it *was* my dog could have gotten a mortgage last year. But thats going away now. Be prepared!

People worry too much about their score. I blame it on all the commercials.

Instead of focusing on credit score, focus on paying your bills on time. Make this a top priority. No late payments – ever. Late payments show up on your credit report when they are more than 30 days delinquent. Keep your revolving balances below 40% of the available limit, or ideally, below 20% of limit. Like Trent said, don’t apply for credit cards on a whim.

If you handle your finances responsible, it is reflected in the credit score and that is the purpose of scoring.

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What’s criminal about it? It improves your score if you don’t change your spending habits. I would like them to give me a $1,000,000 credit limit if they would do it.

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Should I ask for the card limit on my card to be reduced? I’ve never had any other debt and don’t plan on acquiring any anytime soon.
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No. It will reduce your score to have your credit limit lowered. If you’re already being responsible and not carrying a balance, there is absolutely no reason to lower your limit. The only reason you would ever want to is if you think that YOU personally cannot trust yourself with more spending power.

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Why would you ask for your credit limit to be reduced? To limit the amount of damage you can do to yourself by being careless. To limit the amount of damage that a scammer could do to you. To increase your borrowing power: a $5000 credit card isn’t an asset – it’s a LIABILITY and reduces the amount that you can borrow towards a home.

Why would you want ANY credit? Answer: because every once in a while it’s handy to buy stuff online.
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So many things wrong with this post. First off, having a lower limit will not reduce the “damage a scammer can do to you” – you already aren’t liable for that damage, by law. (And the limit may not actually limit how much they can charge to it anyway). Second off, it’s NOT a “liability” to have a large credit limit. It DOES NOT reduce the amount you could borrow for a home. It actually might INCREASE how much you could borrow because it would increase your credit score. The only situation where it might cause you problems with mortgage borrowing would be with a human being manually reviewing your report – and in that case, they would simply ask you to reduce your available credit during the application process, not deny you the loan just based on unused credit availability. Don’t live in fear of your credit limit just over this – it’s easily remedied if does become a problem (and it likely won’t be anyway unless you have massive credit lines). Again, it DOES NOT hurt you in the automated score reporting: actually, it does the opposite.

And it’s good to have credit cards, for more reasons than just convenience. They give you free float, much better legal and practical protections against fraud than debit cards, and often lots of money back on rewards. They increase your credit score which could save you massive amounts of money on a mortgage. The only situation where credit cards are a problem is when someone has no self-control. And in that case, the problem is the person, not the credit cards.

Trying to get to the point where i can pay off the card monthly though.

I have cards that exceed 30% of my salary…doesn’t seem to have hurt my score at all. I think they give you “points”, particularly when buying a house, for having a large credit line AVAILABLE but not actually USING it. Your ability to restrain yourself and not max cards out is important. The higher your limits and the lower your balances, the better your “debt to available credit” ratio is going to be. When I bought a home they looked at this also.

If you don’t have the self control to not use a big limit, by all means ask the credit company to reduce the limit.

Also guard your credit carefully. When I shop online, I use those random-generated numbers that are one-time use or one-merchant numbesr so I never have to put my credit limit on the line. Discover and Bank of America has these. I’m sure others do as well.

The cards that do not report their credit limit – just high balance – are also very problematic for the credit score. You then appear to have 100% utilization. Capital One is notorious for that, and I really wonder when Congress will do something about this kind of unethical reporting.

As to how many cards to have – I think that depends on individual’s risk level. Credit cards don’t hurt the owner – it’s what one DOES with them that’s an issue. Some (disciplined) people make significant amounts from AppORamas (applying for a slew of cards at once, against which you caution); others can’t pay their balance on time with one, and hurt their credit score. To each his own – but I applaud your quest to inform people!

I have one question. I opened a Macy’s credit card to get the discount during the purchase for my kid. It is a small balance which I will pay off. Once it is paid off, is it worth keeping this card? I have other credit cards (frequently used) with much lower interest rates. Any advice?

uh… loans and credit cards aren’t handouts.

You need to give that money BACK at some point.

You know that right?

Why would you want ANY credit? Answer: because every once in a while it’s handy to buy stuff online.

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Does it really happen in America that the bank just sends you a letter saying “Guess what?! We’ve just increased your credit limit!!” ? That’s criminal.

It’s bad enough that I’ve spent the entire of the last 18 months with my card maxed out and barely making the payments, then the bank has got the nerve to send me a letter offering to INCREASE my limit!! When I was clearly struggling to service the debt I DID have!!

You know what I did with my $5000 performance bonus this year? Nothing. I didn’t buy a single thing. Paid of my c/c’s instead.

Get a handout, then pyramid it into more and more credit. Is this a great country or what?

How does the credit score algorhythm know your annual salary? I’m not aware that it’s tracked by CRAs.

I am following your blog daily and I found two conflicting ideas you suggest that I have a hard time reconciling them:

“Another tip is that by canceling credit cards, you’re actually hurting yourself in two ways.First, you’re reducing the total available revolving credit that you have without reducing the amount of current debt you have, thus raising your credit ratio. Second, by eliminating lines of credit, you’re shortening your credit history. Simply put, if you’ve already got a credit card and paid it off, don’t cancel it; put it away somewhere safe.”

VS.

“Keep the total amount of your credit cards’ available credit low ”

So, if I cancel a card and/or if I have several cards – it’s bad BUT if I have several cards the combined credit limit reduces my debt ratio.

What’s the right way then ?

Thanks.

http://singlemomandmoney.blogspot.com/2007/07/should-i-pay-minimum-to-prove-that-i.html

On a different topic, what do you think about people who take out huge CC loan on 0% interest and put that money in online bank to gain 5% interest? I knew a blogger who does this and it seems pretty risky to me.