Prior to 3 weeks ago, I hadn’t seen my credit score in more than 12 years. I couldn’t care less about it. In fact, I don’t even need one.
And yet this strange and mysterious number seems to loom over the lives of people like the specter of death.
Comments and emails about credit score on a post about using credit card rewards programs to fund travel included words such as “damaged”, “ruined”, and “destroyed.”
Are these incredible adjectives warranted? Can applying for a few credit cards result in real world pain and suffering? Should we spend more real $ on travel instead of using rewards points?
Or is a credit score just a meaningless number?
Credit Worthiness
To figure this out, I looked into our own credit worthiness.
That word, worthiness… Are we worthy of credit? Please almighty bankers bestow upon me the blessings of debt.
I used three free services to check my personal score (I certainly wasn’t going to pay for it.) Despite our recent credit binge, it turns out we are indeed worthy.
In addition to my.creditcards.com data (from TransUnion), certain American Express (Experian) and Capital One (TransUnion) credit cards provide free score information. The AX / Experian results were Very Good with a range of 758-764.
There are other services, some free and some not. I don’t know which are best, but the 3 I used worked well and the price was right.
Factoring in the faux concern, Very Good to Excellent scores seem decent.
But hold on a second! How can we have 7 figures in the bank and have anything less than a perfect credit score?
Credit Score
A credit score is comprised of 6 facets:
- 35% of the score is based on payment history and timeliness
- 30% is based on total debt / amount owed
- 15% is the length of time you’ve had debt / credit
- 10% is new credit
- 10% is type of debt (loans, credit cards)
Notably absent from this score is income, savings rate, net worth, and liquid assets. You know… the important stuff. A person who is in debt up to their eyeballs yet manages to pay on time each month can have an equally excellent score as someone with no debt and millions in the bank.
I’d definitely rather have a high bank balance than a high credit score. Conveniently, that is even easier when travel is partially funded by rewards programs.
The my.CreditCards tool seems to provide the most account detail and deepest explanations about current score. According to it, some of the things keeping me from a perfect 850 score are:
- Lack of sufficient relevant first mortgage history
- Too few accounts currently paid as agreed
- The date that you opened your oldest account is too recent
That all sounds ominous, until you consider that we are Renters for Life, we have no accounts to pay, and our oldest account was opened 12 years ago.
Of the 3 tools I tried, I think the Capital One CreditWise tool does the best job of summarizing this graphically:
With a flawless payment history, to get a perfect credit score I need a 25+ year history (only 13 more years!), a mortgage, and some installment loans (perhaps for a car or a boat, woohoo!)
And I was hoping if I gave this credit score stuff an opportunity to show its credibility, it wouldn’t let me down.
Changes to Credit Score
Note that nowhere in the numbers nor in the opportunities for improvement were new credit cards even mentioned. I couldn’t improve my score by applying for fewer cards or having less credit.
Quite the opposite, the additional Available Credit (and thus lower Credit Used percentage) push the score up.
I simulated this with the Capital One CreditWise tool:
- open a new credit card: +4 points
- increase credit limit on existing card: +6 points
The CreditWise tool can also simulate negative life events:
- delinquent on all accounts for 30 days: -216 points
- delinquent on 1 account for 30 days: -117 points
- cancel my oldest credit card: -10 points
- take out a $50k car loan: 0 points / no change
- take out a $500k mortgage: +16 points
While some of these latter events result in a higher credit score, all seem unwise.
Conclusions
Despite more than a decade of neglect and active use of credit card rewards, my credit score is Excellent. I apply for credit cards with Occupation = Retired, and they never get denied.
While I’m glad to better understand the world of credit scores, this new knowledge has the same value as our actual score (meaning none at all.)
However, I will continue to take 3 non-actions to insure we always have the richest and juiciest reward options available:
- Live below our means. This guarantees the bills are paid on time, every time.
- Keep our oldest credit account open, forever. A no-fee credit card works well for this.
- Keep our credit utilization low by having a lot of available credit.
In summary:
Focus on building wealth. Pay bills on time. Avoid debt. Creditors will love you. The end.
—
The tools I used to see our scores for free (this blog has no relationship with these services):
- my.CreditCards.com
- Capital One CreditWise
- If you use another service and like it, please share in the comments
My favorite free credit check service is Credit Karma because they give you a score estimate (same VantageScore as you mentioned above) from two different bureaus (TransUnion & Equifax) along with all of the factors impacting both reports. Makes it really easy to see what banks are pulling which report(s).
We play the credit card game as well and have made out with a ton of free travel over the past year or so. I’m really looking forward to our honeymoon in Fiji where we’ll be flying business class, stopping over in New Zealand, and covering all 16 hotel nights with points!
Despite frequently signing up for credit cards, we recently had no problem refinancing our house, so don’t listen to the “destroy your credit” nonsense. Cheers!
Nice use of points! Did you use 110k Alaska miles to book biz class flights on Fiji Air with the stopover in NZ? We may do a version of this for our winter destination.
I bet your wife enjoys your honeymoon a lot more than Winnie enjoyed ours ;)
Pretty close! We ended up using 125k American miles to get from Seattle to New Zealand in Qantas business (with 12 hours in Brisbane on the way), then 110k Alaska miles from Auckland to Fiji (12 day stopover) and then back to Seattle in Fiji Airways business. Availability can be tricky depending on the time of year, so I was looking for stop-overs in either destination.
I have all the details here.
We’re super excited about the honeymoon, but I don’t think we’ll be able to top the awesome rally cry/website name you guys came up with!
Hi guys!
Once upon a time I had a mortgage and I paid it off. When that happened, I decided to aggressively play the points and rewards credit card game to see how much of a difference it would make on my credit. I kept relatively decent records for two years, during which I opened anything that offered me more than $50 or a free airline ticket. It required good record keeping, and after a while I got tired of not having enough vacation time to even use the flights. However, I did find a direct relationship between abusing credit card points and credit score– at least in my case:
2011: 761 score
2012: 771 score
2013: 773 score
2014: 789 score
I never quite figured out why I started with such a low score, considering I’ve never been late in my life, though your post sheds light on the subject. In any case… in my extensive N=1 research, I’ve come to the conclusion that the more credit cards you abuse for points, the better your (meaningless) credit score gets :).
You are like the dream credit card holder: never late, always paid in full…
The credit card companies are fortunate to have such a valuable customer.
I couldn’t agree with you more. But I also don’t plan on taking on any debt in the near future. No mortgage, no car loans, no loans at all for me :)
Livin the dream
I totally agree! Once you gain true financial independence, credit score really becomes mostly meaningless.
To be completely forthcoming, I’ve never actually checked my credit score. There was never a need.
That’s pretty much my take on the whole credit card game. I’ve applied for probably hundreds of cards over the past 10-15 years, financed part of my first home purchase on a 2.99% fixed rate convenience check, and for a while had a six figure pot of cash borrowed at 0% and invested in a MM account at 5% (arbitrage FTW).
Impact on long term credit score? Very little. When I had the six figures of credit card debt at 0%, I started to get denied on new CC applications and had to explain the situation to a mortgage company when I applied for a home loan refinance. Otherwise it’s been smooth sailing. The last time I checked my credit report I had 41 active credit card accounts and a FICO credit score around 810-830 (on a 850 point scale). The action I needed to take to increase my credit score? Apply for additional credit accounts. :)
Your key takeaways at the end are on point. Pay your bills every month, keep old cards open, and don’t use a high percentage of available credit on any one card or across all open credit lines (my downfall when I had the six figures of CC debt at 0%).
I’ll add another one. Don’t ever get in the situation needing credit to survive. That way, if you get turned down for a mortgage or car loan, you can always pay cash if necessary. Nothing like being able to say “ok, it’s cool mortgage co, screw you, I’ll just pay cash”. :)
As for source of credit score info, I’ve been using the FICO score provided by Barclay’s. I seem to keep a Barclay’s CC open at any given time (most recently applied for the Barclay Arrival card) and they provide a free FICO score that’s constantly updated.
I’ve done the “I’ll pay cash” move before with an apartment we were looking to rent.
They said something was weird with my credit report (probably because they didn’t run it and just pocketed the fee.) I offered to pay a whole year worth of rent upon move in if they gave me a 10% discount. After staring off into space for a few minutes they just approved our application and set the move-in date.
Ha ha. “How about I pay first and last rent. And the 2nd, 3rd, 4th… 10th and 11th month rents too?”
I’ve read a similar response from other early retirees that they had no problem renting places after retirement. Offer to pay up front or pay 3-6 months up front. Only the most ridiculous management would refuse to rent to someone with a seven figure balance sheet and ability to document income and assets.
41 open accounts! I didn’t know you guys have been in the credit card game so long. You must have seen a lot of changes in the past 15 years!
I think I sit around 20 open right now, but I’m pretty aggressive with closing them if they have an annual fee. Give me another 10 years or so to catch up ;)
I can’t wait to be able to play the “I can pay cash for the house if necessary” card.
“In summary:
Focus on building wealth. Pay bills on time. Avoid debt. Creditors will love you. The end.”
Wisdom right there. Nice post, Jeremy.
Thanks dawg
1. Using a free service gives you a litmus, but if you need a paid service, the only number that matters is your FICO, which can only be received via myFICO
.
For those of us with debt it’s an excellent service and app. When applying to refi, but a car, etc, there are three bureaus, five or six different versions of your FICO, and each industry uses different ones. The reason I know this is because I kept being told I was below the excellent credit line on a refi, I found out that my credit was useless.
2. It pays to do a VERY deep dive into each and every version of your FICO. That’s how you find mistakes. You can dispute those mistakes yourself, but if that doesn’t work, there are services that will help you get BS off your score to raise it. I spent $500 to get an error off my score to bring my score over the 740+ threshold for excellent FICO on the 2nd version that mortgage companies use. 5% vs 3% – worth it.
I agree that credit scores are BS, using debt isn’t ideal, but if you must, myFICO
is all that matters.
You shouldn’t need any different kinds of scores to find mistakes on your credit, just comb over the free annual reports you can get from all 3 bureaus and you can see all of the factors that go into your score.
Working backwards from score(s) seems difficult and unnecessary (especially if you’re paying for that score).
Nice post, Jeremy. I agree to an extent that our credit scores are somewhat meaningless. However, we wouldn’t get approved for many/any of the awesome travel reward cards we all take advantage of if we had bad credit.
I don’t plan on checking my credit score for another 12 years. I’m sure it will be fine.
I’m sure it will be just fine whether you check it or not, and I wasn’t suggesting otherwise. I was just saying that the score itself does have some relevance, with approval for travel rewards cards being one example.
Are you guys ready for Lisbon? We leave on Monday (a day earlier now that AA screwed us)
I get my credit score monthly from a Chase credit card. I believe that Bank of America also offers free credit scores as well.
I have a decent credit score, but not “perfect”, because I have never had a mortgage and because I always bought used cars for cash. That being said, I used to do CC arbitrage in the good old days where I would have an interest free loan from the CC companies, that I saved at CD’s yielding 5% ( back when CD’s yielded 5% ~ 8 – 10 years ago).
A CC score would mostly be helpful if I ever decide to buy a house. Or if I want to do the travel hacking that everyone else seems to be doing. Other than that, my passive income is a more important tool to have ( or in your case how much money you can withdraw using 4%)
I agree that having enough assets to retire is more important than having a perfect credit score. It is interesting that this does not get into the calculation of creditworthiness – possibly because most people in the US have low net worths to begin with.
By the way, I have enjoyed the latest features of the GCC family. The hateful comments under each article are just entertaining for me. It is entertaining to see people who do not get the concept of financial independence, yet have an opinion about the topic that no amount of arguments and evidence will shake. As Charlie Munger says:
“The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can’t get in. The human mind has a big tendency of the same sort “
I played the arbitrage game a few times with zero interest / zero fee credit cards, including:
– paid down a 7%+/- student loan
– paid down a car loan
– eliminated PMI by paying down mortgage with CC check (from the same bank that held my mortgage)
– purchased closed-end funds that paid 7%
Arbitrage is a beautiful thing.
re: the comments.
My favorites are usually the ones that say our story can’t work because of math. They then proceed to show that they can’t do math.
re: comments
Yeah, but still. Math. I mean you can’t because math. Math.
Congrats on that very impressive score!
Agree that with your lifestyle you don’t need a stellar score. If you never intend to apply for a mortgage in the US, no need to strive for 780+. If you want decent credit card deals with zero intro interest rate, you probably still want to maintain 720+. If you don’t even need that, who cares? Well, the one reason to still care and monitor your credit is to check for any errors of signs of fraud. Caught early that would be easy to fix. Glad that after 12 years of neglect everything is still in good shape!
We do monitor our scores regularly. Different sources (creditkarma and various credit cards) all give significantly different values: 814 to 843 at any given time. So we never stress out over a f points up or down. This credit score business is not exact science!
Discover, Citibank, Barclay and Chase all provide free credit scores with the cards.
It’s a myth that your scores will be dinged by opening new credit cards. My husband and I have 4-5 credit cards each right now and at one time we went crazy with travel hacking and have signed up about 10 each. :-)
Our credit card scores got dinged a couple of points every time we got a new card but recovered quickly because of increased credit availability. Our credit scores are still at upper 700, considered excellent by the lenders, though we don’t really need credit now because we buy used cars with cash and have a almost paid off mortgage.
We put $10-20k business expenses on the credit cards monthly, and MS quite a bit, which we setup auto pay to pay down before the issuers reporting to credit bureaus and don’t carry a balance.
I was always worried about the damaging of my credit score but finally said screw it and started my goal of taking advantage of the sign up bonuses. Ill just keep doing what i do and keep my oldest credit card forever. I actually have Equifax credit watch signed up but will probably cancel it as I don’t check my score anymore , whats the sense
I find this subject fascinating.
So a billionaire, with no debt, pays all his bills on time, can have a lower credit score than someone who has lots of credit cards and debt. Our system does seem a bit wacky.
And the idea of using credit cards to get free travel or a way of arbitrage. It seems too easy. The little bit I’ve looked into it, the card companies want me to spend so much money to get the advantages of the card, and that is the turn-off for me. I’m not trying to be negative, kudos to all of you who seem to do it with relative ease.
BTW, I’m a huge fan of your site, thanks for all you do.
Yeah, Warren Buffett probably has a lower credit score than his secretary.
Most of the sign-up bonuses for new credit cards can be met with a few thousand dollar spend over 2 or 3 months. With a little advance planning, that is an easy task to accomplish. There are cards that give additional bonuses if you spend more than $100k/year; great for business owners but something I’ll pass on as well.
Thanks Mike!
I always laugh at comments on your blog that both of you were able to achieve your goals of early retirement because Winnie and you were high income earners. My husband and I don’t make a whole lot of money, about national median income, plus my husband was laid off and without a job for almost 2 years during the 2008 financial crisis. We managed to keep the house, stay out of debt, put away money for retirement, live and travel. In fact, we found creative ways to create our own economy during the unemployment period, having access to a cushy emergency fund allowed my husband to explore other opportunities without stress. We almost never go out to eat during the two years that my husband was unemployed, we did things that are FREE, and took road trips with rental cars and hotels that were paid by credit card awards.
My parents always taught me that it’s not how much you make that matters, what matters is how you adjust your lifestyle to live below your mean and set saving as a priority. (My incredible parents paid for college education of 6 children on a modest income, so all my siblings graduated college without student loan!(Post graduate we were all on all own, either we get a scholarship or save for it.)
My in laws made 5x more money than my parents during their working years, but my husband and his brother both had student loans. My husband came from a family of financial illiterates, the in laws had to downsize their house in an expensive area to a lower cost area in order to retire comfortably (They were lucky to do it before the housing market tanked, or else they would be in deep shit as they used their house as an ATM machine, had refinance multiple times and still carry a mortgage during the sale, after 40 years!). They always say “we can’t afford it” for important things despite having cushy pension and SS that totaled more than our income!! See, high income is nice, but not necessary make you fair better financially!
Great stories! I think all of these examples would fit great in the book The Millionaire Next Door. $10k/year or $1 million/year, if you spend it all your still poor.
I have something to confess, I’ve never checked my credit score. Whenever I applied for a credit card, I always get higher limit than what I had in mind, not sure if that means my credit score is awesome or bad. I think if you have no intention of buying a home (i.e. mortgage) or taking out a loan, credit score is not so important to you. And if you’re in FI, then why would you care about this score when your bank account is stuffed?
It seems every time we apply for a new card they just give us $20k or more. Our combined outstanding credit limits are over $150k right now. Crazy.
Were it not for the comments, I probably would have gone the rest of my life without checking the score.
No wonder so many people get into credit card debt issue.
I really believe it is a good idea to get started early on getting your credit score up there. But like others have said, if you do a good job of paying all your bills on time and are not a knucklehead with your money, your credit score should be just fine. Thanks for the post, always good to see new ones from you.
I noticed once I got my finances and life in order, credit score means nothing to me. I do like owning a home so I suppose it will come up again someday but I haven’t looked at my credit score in years.
YAY Go Curry Cracker! Excellent view of this stupid thing called a credit score. I recently spoke about this very topic as a guest on the Money Tree Investing Podcast (Episode 81: Build Wealth, Not a Credit Score). You are spot on, my friend!
Playing the “build your credit score” game is folly. Just doing smart things with money will cause one to be creditWORTHY – even without credit cards, car loans or a mortgage.
Debt-free is the way to be and building wealth is good for your health!
The podcast title says it all.
With all the data breaches over the last five years, have you considered freezing your credit for peace of mind? My wife and I have both done it, as we don’t anticipate needing to apply for credit ever again. If we did, we’d simply call the three major credit bureaus and remove the freeze. Really just an attempt to stop someone from opening credit under our names if there is a data breach we are associated with (i.e. Target, Home Depot, etc). Curious of your thoughts….
Identity theft and breaches are incredibly rare, as evidenced by the low cost of id theft insurance. So I already have great peace of mind.
We apply for multiple cards per year, and I think the value we get far exceeds the risks. ymmv
Hello from the UK.
Credit Fraud is much more frequently in the news on this side of the pond, and Identify Theft Insurance is accordingly poor value for money, in my humble opinion.
Also, credit history is frequently used over here for anti-money laundering purposes for just about every financial transaction, including applying to open interest bearing accounts (i.e. not restricted to money borrowing purposes). Life is a lot more hassle without a credit history!
Using cash in USA marks one as a dead beat who must be incapable of qualifying for credit and therefore not expecting or worthy of courteous service delivery; and certainly not to be trusted with a rental car or a room at the inn. In Australia the principal advantage of a credit card is to suspend fraudulent or not fit for purpose transactions. Credit cards are only relevant to housing loans to the extent that the combined credit card limit is subtracted from the loanable maximum. Irrelevant to me but checking moments ago gave an ‘Excellent’ score of 978 / 1200 using getcreditscore.com.au
I should add re getcreditscore.com.au: “This site is powered by SocietyOne & Veda”. Society One: ‘P2P lender’. Veda: ‘largest credit reference agency in Australia’. Debt and credit pushers.
I also don’t care what my score is because I don’t need anymore cards or loans. I do know what it is though through Chase. I got the email that they provided it so I checked. Recently froze my credit so no one else can open accounts or access my credit. My thinking was why risk the hassle of identity theft if you don’t need credit. Personal Capital gives me a good view of all transactions and I actually look over the daily emails. Signed up for lastpass fruad notification and thats it. Have experienced identify theft with a checking account that I wasn’t watching closely and it was a pain to fix and lost about $500 on oldest charges that passed the deadline for contesting. Thats not happening again. Love the blog by the way and plan of retiring soon.
We have been studying the mystery behind credit scores, and this post gives us a more in-depth look. Thanks for the information.
We both have excellent scores, but one score is about 30 points higher. We concluded that it’s because one of us started a credit card at 20 years of age which has resulted in almost 30 years history with the same company. Even though we barely use that card–and frankly would love not to have so many–we decided that we’d better keep it. Several years ago, we switched to a no-fee card within the same company, and we charge less than $50 per month on it. It sounds, from your post, that we did the smart thing not to cancel the card. We appreciate the confirmation.
One question: The credit limit on our oldest card is insanely high, and we flirt with the idea of asking the company to reduce it. (That card was stolen once, the account number changed several times because of false charges, and we’re constantly getting notices about identity theft.) Are you and others suggesting that we should not reduce that credit limit (lest it reduce our credit score)?
Thanks!
I think you should do whatever makes you happiest, the credit score is meaningless.
If are worried about it, just call the card company and ask them to transfer most of the old credit limit to your newer card.
Great posts! Always fun to read. Have 3 credit cards, but have never applied for the “perks” cards. I too pay no attention to our score. But my question is.. What are a few cards that are “must haves” according to the airline/whatever points you can get?? Thanks!!
It depends on your goals. Points are just points unless you have a plan to use them.
I’d pick a destination, figure out which airlines are most convenient to get there, and then get an airline card that offers the best value. For example, if you lived in Atlanta a Delta card would probably be better than a United card, but the opposite would be true if you lived in Chicago.
For hotels, the Starwood cards seem to offer the best signup bonus in terms of free nights.
For generic points that can be transferred to many airlines / hotel programs, the Chase Sapphire Preferred card is highly regarded.
Thanks. Went to the Chase website and it says 1st year free then $95 annually. How do you get out of those fees?
Sometimes you’ll pay it, because you think, “Hot damn, I get several free hotel nights each year for just $95!” Other times you’ll cancel the card and use a different one for the next year.
In the past five years my wife and I took out a mortgage and then paid it off, paid off $100k in student loans, and paid off a three year car loan in a year. Now that we’re debt free, our scores bounce around between 810-830. Since we never plan on taking out a mortgage again, it’s really irrelevant what our scores are, unless we plan on taking out some credit cards to play the points game.
I think people’s obsessions with their credit scores and the games they play to increase it are just manufactured anxiety by the marketing departments of the banks and credit card companies. When people tell me they are taking out an auto loan and minimizing their student loan payments because they want to keep their credit score higher (by having multiple accounts) I know that the marketing departments are winning. Hopefully posts like this will get people to consider what’s important (ie, saving and investing, not some randomly assigned number).
Kudos to you for using “couldn’t care less” instead of “could care less”.
I also appreciate your view that your credit score has value for rewards programs. I consider myself a lite travel hacker and have enjoyed many free hotel nights and a few free flights for the effort. My credit score has barely moved. In fact, just as you note, a little extra credit has caused my score to move up a handful of points.
Thanks agin for the insight.
Thanks for the links and insight. As a new travel hacker I was pretending to myself that I didn’t care about my credit score. It turns out I did care, as I immediately used your links to find out! I was pleasantly surprised, but some competition crept in when it turned out that Mr. PIE was one point higher than me!!
I don’t have a credit score at all, having moved to the US about a year ago, and having never used a Credit card (I use my debit card a lot to pay my bills though).
I’m not sure a “good/bad” credit score is a problem, but having none at all has been an issue in a few instances for me:
– some companies such as Comcast refuse to open an account for me on their websites, stating that my SSN is invalid. I “had” to go with Centurylink in my area
– Most condos would flat out refuse to rent to me, given that I have no credit history. I cut a deal with my current landlord by paying upfront for the last month of rent. There’s a loss of money involved for me here, assuming a 7% return in the market…
Google search: ‘living without a credit score’ produces 4M results. You will have a credit score free for the asking. ‘credit score never had credit card’ produces 5.5M results.
Hey guys, it seems there are two types of people on this chain – people who have paid off all their debt and can live without a credit score and those that cannot. I agree with the sentiment that a credit score is total BS, I also agree that it really shouldn’t matter, I don’t agree that it doesn’t matter for everyone. And I’ll make the point again – the only score that matters is your FICO score. If you are applying for a mortgage, a credit card, or anything else using credit, everyone uses your FICO score. So you can have A+ credit and in my case a score of some nonsense like 900, but what actually matters is the FICO score below that. Your credit score won’t tell you what threshold the bank is actually using to decide whether you are A or A+. Each type of creditor also weights different bureaus differently. For example, if you are applying for a mortgage, at least here in California, 740+ is the threshold for A+ credit. What does that mean? In the case of my bank, they look at all three scores and use the lowest one. They also use “FICO Score 5” as their judgment. In my case – my FICO in Equifax is 816, but wait, that’s FICO Score 8. Completely irrelevant. My FICO Score 5 is 773 for Equifax, 778 for Transunion, and 746 for Experian. Recently, I was setting up a HELOC and my wife had one score at 816 and one at 720 bc of an error. Without removing that error, we’d only qualify as the A rating. Well, that’s a difference of 3.25% for the HELOC and 5%. BIG DIFFERENCE. Autos use FICO Score 2 and credit cards use FICO Score 3. The credit card score for me is a waste of time – bc I pay it off each month. Also, a little trick if you’re just below a threshold that you want to be at – your FICO looks at the ratio of credit availability to credit used each month. If you are a heavy user like me to get points, this can help you if you need a little bump. Pay the credit cards off early – before the statement comes out. The drawback to this is the credit card won’t give you points for that month, but the benefit is the credit card company thinks you used $0 of your available credit. You’ll get a nice 8-15 point bump the next time you get screened.
And contrary to what everyone is saying on this chain, errors are often VERY hard to spot. I look at things with a fine tooth comb – guess what, they appear in some versions of FICO and other versions they do not. So unless you’re scanning your FICO, you won’t find them easily.
And since I love bashing credit scores, John Oliver did a piece on it this week which was excellent:
https://www.youtube.com/watch?v=aRrDsbUdY_k&nohtml5=False
Nice post! And awesome video! Never forget, employers check your credit (and landlords, insurance companies etc.). I once tried to hire an intern, highly recommended from his professor at a local college. Interviewed the guy, forwarded to HR to hire him for the summer. Not so fast: he failed the credit check and the offer fell through. You can’t even get a summer internship in a finance firm if your credit is shot.
Also, there are some interesting posts on credit card arbitrage on here, are there any GCC articles or useful links you guys can suggest?
Being a type-A people pleaser test-passer, OF COURSE I want the highest score possible! But does it impact my day-to-day life? Not so much.
Still, even with no immediate need or desire to borrow money, it’s nice to have “just in case” — and as you point out, easy to maintain, even while taking advantage of fun credit card hacking.
Yup. I totally agree. Don’t need debt, don’t need to care about credit score. I rent and I enjoy the freedom comes from it. Cheers!
BSR
I recently cancelled a few cards as I thought I had too many (about 7 – opened for the sign up bonuses). My score then dropped a few points to about 798. Silly me ;)
One of my cards with a pretty long history was canceled by the issuer because I hadn’t used it for 5 years. I think the score dropped, but it’s hard to say given how noisy this credit score business is.
Quick question for you. Are you able to meet your minimum spend amounts using your card in foreign currency? I recently applied for a southwest card but was told on the phone that purchases I made here in Spain (where I’m presently living) in euros wouldn’t count toward the bonus. I cancelled the card right away, but now I’m wondering if the phone rep was wrong. What’s your experience with getting card bonuses for cards used in a foreign currency? I do get points for my daily purchases on my other cards now that I think about it. Hmm.
I have hundreds of International transactions that received full points. We don’t have the Southwest card though…
Hey Curry Cracker. Have you seen any 0% balance transfer cards as of late? My wife is looking to transfer some money. We still have a bit more of student loans. Do you think we can still transfer student loans to a 0% card like you did a few years back?
BTW. Chase has the Chase Slate card that has 0% on balance transfers.
My score comes with my Discover and AMEX cards, so that’s what I use. I no longer actively try to improve it. I keep my utilization near 0% and pay them off in full (I charge everything to my cards).
Knowing I have to pay it in full when the bill comes keeps me spending less than I make, plus I get rewards and pay zero interest, and get any other benefits the cards provide (fraud protection, extended warranties, etc.).
Obviously this strategy isn’t good if you have no control of your spending. Choose wisely.
Since you get the yearly credit report free, you have no reason not to check your record of loan repayment yearly.
http://www.checkmycreditratings.co.uk/
http://www.freeannualcreditsreport.co.uk/
“no reason not to check”: except that the information gain is not worth the effort expended looking at or protecting one’s credit status when one does not need credit.