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My problem with Dave Ramsey (and now you) is that instead of encouraging people to learn financial responsibility you are basically saying "you are too stupid, just avoid it." By doing this, you cut these people off from enjoying the benefits of a very useful financial tool.
I like to give people more "credit" then that.
You seem to be saying that people need to go into debt to 'learn financial responsibility' (?) --- My contention is that when one learns financial responsibility, they will stay out of debt, (except, perhaps, short-term debt that they have the resources to satisfy on-demand, if necessary).
yes - requesting doesn't really hurt you, and increasing your limit will help, by reducing your debt:credit ratio if you have a statement balance that's reported to the 3 agencies.
Thanks again for the continued advice.
On the 6th is when my CC will hit its one-year-anniversary, so I will make the request Monday.
To follow this, and I think I had asked this already, but would it be a better option to then get a personal loan from my bank for maybe around 10k or so, put it into my savings account, and just pay on that for the next 2 years IN ADDITION to getting another CC from another bank, or should it be one or the other?
Location: 23.7 million to 162 million miles North of Venus
23,453 posts, read 12,487,658 times
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Quote:
Originally Posted by Soup Sandwich
Thanks again for the continued advice.
On the 6th is when my CC will hit its one-year-anniversary, so I will make the request Monday.
To follow this, and I think I had asked this already, but would it be a better option to then get a personal loan from my bank for maybe around 10k or so, put it into my savings account, and just pay on that for the next 2 years IN ADDITION to getting another CC from another bank, or should it be one or the other?
If you go for one new product then I would suggest going with a credit card - revolving accounts carry more weight in the scoring models than fixed rate loans do.
As for getting both, again, you should check your reports to see if there is a fall off date tied to your Star card. If the Star card will be falling off before you start mortgage shopping then you'll be back to having limited credit again (you'll also lose age/history, and that will hurt).
Before deciding on whether to get a credit builder loan, you might play around on the FICO Score Estimator to see where you'd stand after two years. Keep in mind that it is only an 'estimator', it is not based on all of the factors in the FICO scoring models. Free Credit Score Estimator: Get Your Estimated FICO<sup>®</sup> Score Range
If you decide to get both a credit card and a loan, I would suggest going with a credit union. Most credit unions will use the same credit report when a person puts in apps for both a credit card and a loan 'at the same time'. (many people app for both products during the same time they join the CU)
Also, I had previously mentioned putting the loan money into a CD, I should have expanded that comment by saying the loan you get should be backed by the CD - that will save you money on interest since it would be a secured loan. A personal loan typically carries higher interest than a secured loan.
You seem to be saying that people need to go into debt to 'learn financial responsibility' (?) --- My contention is that when one learns financial responsibility, they will stay out of debt, (except, perhaps, short-term debt that they have the resources to satisfy on-demand, if necessary).
I'm not sure where you got that from what I've been saying. If a person learns financial responsibility, he will stay out of debt (except where it makes sense) and still be able to use the tools many here admonish.
It's the ostrich head in the sand mentality that makes me crazy. Driving a car can be very dangerous, but no one jumps up and down advising you to never learn how to do it safely (relatively). Why do they do this with credit products?
Well, On Monday I applied online with my bank for a credit limit increase to take it from 500 to 1,000.
I just looked at my online account and they increased it to 7,000!
WHAT?
That was... unexpected. I guess that's good? What's considered too much available credit in a mortgage lender's eyes, if that's a thing at all?
I still don't ever plan on carrying a balance, so really I was just worried about not being stuck with a kiddy kard while I'm building credit over the next couple years.
Location: 23.7 million to 162 million miles North of Venus
23,453 posts, read 12,487,658 times
Reputation: 10436
Quote:
Originally Posted by Soup Sandwich
UPDATE:
Well, On Monday I applied online with my bank for a credit limit increase to take it from 500 to 1,000.
I just looked at my online account and they increased it to 7,000!
WHAT?
That was... unexpected. I guess that's good? What's considered too much available credit in a mortgage lender's eyes, if that's a thing at all?
I still don't ever plan on carrying a balance, so really I was just worried about not being stuck with a kiddy kard while I'm building credit over the next couple years.
That is a great increase, which definitely takes your card out of the toy card status. I had previously mentioned that they could surprise you with an increase of more than what you ask for. It shows that they are more than comfortable with the way that you've been handling your card account.
Even if you apply for a new card and they match your current $7k limit, bringing you to an overall credit limit of $14k, you really don't have to worry about the "too much available credit". You stated that your income was $45k and that you expected a $10k increase. Even at $45k, and you get another card with a matching credit limit, your overall credit limit wouldn't even come close to matching (being at 1x) your annual income. Plus, you use your card sparingly and always pay in full.
Many creditors/lenders are comfortable if someone has an overall credit limit that is 1x, 2x (or maybe even 3+x, though people with 3+x are typically wealthy/high pay earners) their annual income, especially if that person has a history of not abusing their cards.
Before you decide to apply for the second card (with a different card lender!), be sure that the credit limit increase on your existing card is being reported. Since creditors often like to match (more or less) existing credit limits, if you apply after the credit limit on the existing card is reporting than that betters your chances of not being stuck with another toy card.
Some creditors will begin reporting a credit limit increase right away, others will wait until the statement cuts before they report it. You might sign up with a site like Credit Karma, which is free, to keep track on when they start reporting the increase to all three CRA's. Since you won't know which CRA the new card lender would pull, you should wait until the increase is reporting with all of the CRA's.
Then keep doing what you've been doing, using the card(s) for minor purchases and paying in full when the statements cut - you'll be fine. Congrat's on not only the nice increase but in how you've been handling your finances in general - and good luck in not only your continued credit building but also in your future mortgage shopping!!
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