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I think I have an addiction. It's been barely 3 years since I started building my credit. The first card I got only had a $200 limit. Since then I've opened more than 20 credit cards and trade lines with a combined limit of more than $70, 000 in unsecured credit today. Let me give you a little background into how it got to this:
Obtaining credit has always been a dream of mine. The luxury and convenience of having purchasing power beyond what I can afford always seem appealing to me. I know you must be thinking I'm a bankruptcy case waiting to happen, but that couldn't be farther from the truth. I'm actually pretty conservative when it comes on to spending. My present credit utilization ratio is around 5%. Consequently I've managed to maintain good to excellent credit scores even with all these cards. I guess you can say I'm a hoarder of credit. I enjoy the process of obtaining credit. It's like a game to me and I actually get a little thrill out of it.
The remarkable thing is that I am still young on my credit journey. I have yet to apply for a car loan or a mortgage. I plan to get a car next year. By the time I'm done on this journey, I could see myself having close to $1 million in total credit instruments. I guess this would be a nice consolation if I don't manage to become a millionaire in real life.
Give me your judgements in comments.
Your proud that you have $70,000 in potential debt that you will then end up paying back many times that in interest.
I am proud of the fact that I have several times that in assets.
You have the goal of having a million $ in potential debt. I have the goal of having several million $.
FREEDOM to spend comes from assets, not debt. Debt is an anchor.
Purchasing power is nice, it's nicer when it's YOUR MONEY.
I was in a similar situation once and lost my job and started to live on my credit cards because the credit was available. I charged every thing except my mortgage. Because all this credit was available to me and they kept sending me more and more credit card conv checks, which I cashed, I ended up owing as much as $70K before they cut off my spending and started to lower my credit limits and cancel cards, even though I never had a late or incomplete payment.
I am convinced that if I did not have access to all that credit I would have worked harder to get a new job.
After I eventually paid off all that debt, due to an inheritance, I cut up all those credit cards into little piece and only use one card which has a very low limit so I can control my spending.
To have an Outstanding Credit Score...I'm sorry but you need more than just Cards on your credit report....20 Open cards is unnecessary and will start to hurt you with creditors...
Too Many Open Credit Lines regardless of limits. In Post-2008 Creditors look at this very seriously.
The best ways of obtaining an excellent credit score that are in your control, are:
- Keeping well below your limits
- Consistent On Time Payments
- Diversified types of Credit
A lot of people miss that 3rd Bullet Point.....No One Person needs more than 3-5 Credit Cards, and I personally find anything more than 3 active cards (in use) to be excessive...having another 2-3 cards dormant (out of use) to serve as a balancing act for Average Age of Accounts, and Credit to Debt ratio on your report is fine as long as they're not used in any way.
You also should try to obtain some type of Installment Loan (Mortgage, Car Note, etc), this shows a stronger credit worthiness by being required to pay a fixed amount each month...I live in NYC and I rent, a long with not having a Car..so I use Discover Bank to take out small Installment Loans every 2-3 years and transfer it to my Savings and/or Investment Accounts. Right now I have 3 fully paid Installment Loans showing on my Report and 1 active one.
Another type would be to have a Line of Credit (tie to your checking and savings account) with a bank (NOT A CREDIT CARD)..again this is another diversified form of credit, and is looked at as better than a Credit Card for your score. Doesn't need to be anything significantly high, a 3K-5K limit will do. If you don't overdraft often which will trigger a pull from your Line to your Checking...Then every so often pull from the Line put it into your Savings (or Checking) and then pay back the Line.
Last edited by Blackbeauty212; 12-16-2012 at 07:27 AM..
I have probably 100k across all my credit lines...
Ever paid a penny of interest on it?!
Nope...
That sounds reasonable. From the OP, "I could see myself having close to $1 million in total credit instruments". It sounds as though he has control issues or an obsession.
Op, if you want to feel powerful, get an American Express card.
No limit.
Since you're not actually using the cards, this shouldn't be a problem, right?
And think of the POWAH!!!!
I don't know enough about how credit scores are computed to know if it's hurting you to have this much potential credit, but I know that if you start using all of them and getting a very high combined balance it will be pretty bad for you.
If it doesn't hurt you to have so many cards (and I hope someone here knows the answer to this) my advice would be:
1. Only have one or two credit cards with you and keep the rest in a secure location.
2. When they issue new cards keep only one or two on your person, and don't activate the new cards. That way, if your wallet is stolen, you have a card you can activate to use for immediate needs.
3. Concentrate on bringing your total $3500 credit card balance to zero.
4. Live within your means, build assets, and think about where you want to go next.
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