Comments on: Improve your credit 102: How much credit is optimal?

By: The Financial Blogger | 4 Easy Tricks To Improve Your Beacon Score

The Financial Blogger | 4 Easy Tricks To Improve Your Beacon Score — Fri, 16 Nov 2007 11:01:57 +0000

[...] I previously mentioned on this blog, it would not be a bad idea to have three to five credit cards. Credit cards are the easiest way to [...]

By: Mrs. Micah

Mrs. Micah — Wed, 10 Oct 2007 11:37:01 +0000

What CR is talking about is the old (and still frequently used) method for mortgages.

But, there’s a difference between mortgages and credit scores. Mortgage people want to make sure that you’re not going to incur zillions of dollars of new debt and jeopardize their huge loan to you.

But with credit scores, you want a high debt-to-credit ratio. More available credit (more cards) is good up to a point, as The Financial Blogger says. It’s just that mortgages are a different animal.

By: www.topcreditcardsadvice.info » Improve your credit 102: How much credit is optimal?

Tue, 09 Oct 2007 18:52:53 +0000

[...] The Financial Blogger wrote a fantastic post today on “Improve your credit 102: How much credit is optimal?”Here’s ONLY a quick extractBuilding a strong credit score requires a lot of self discipline and a great control over your personal finance.The best way to improve your credit score is to show the financial institutions that you are able to use your available … [...]

By: Carnival of Personal Finance #121 - Columbus Day Edition (Ask Mr Credit Card’s Blog)

Mon, 08 Oct 2007 12:45:46 +0000

[...] is that perhaps we improve the means where consumers can get better educated on issues like how much credit is optimal?, or even how to fight back against debt [...]

By: The Financial Blogger

The Financial Blogger — Sat, 06 Oct 2007 11:00:11 +0000

SVB, 3 cards is a good number. It seems that you will most likely use 2 out of 3 on a regular basis which is even better

It’s funny to be a banker because I don’t think like one. I have a more entrepreneur-marketing mind than the usual rational-straight financial thinking required in bank

I’m lucky as my department requires more creativity and the usual banks!

By: The Digerati Life

The Digerati Life — Sat, 06 Oct 2007 05:25:30 +0000

Interesting post! I have only 3 cards maximum. 1 personal card I use, 1 backup and 1 for business. I didn’t know you are a banker! Cool!

By: The Financial Blogger

The Financial Blogger — Thu, 04 Oct 2007 09:54:59 +0000

Hi CR,
I find very interesting that your mortgage broker use this old method of considering your credit cards at their limit. In fact, we do not use this technique for a while where I work. The main reason why is the following: if you have a good beacon score and a decent income, you can easily get yourself 20K in new credit cards tomorrow morning. So even if you have only one or two cards when you apply for the mortgage, it does not mean you can’t get much more credit right after your mortgage approval.

Having only one card could hurt your beacon score while having three to five will improve it and should not be factored in your TDSR calculation if they do not show an outstanding balance.

TMW, the limited usage of a line of credit is another great way to improve your credit score. Unfortunately, not everyone can qualify for one.

Thx your thoughts guys!

By: ThickenMyWallet

ThickenMyWallet — Wed, 03 Oct 2007 17:42:59 +0000

The one method I use to keep up good credit rating is I have one card which sits in a drawer somewhere with one charge on it every month- my newspaper subscription. I pay it down on time; it shows useage, you keep a small balance to available credit ratio and you maintain a history (its my oldest CC from my undergrad days).

The other tip is also to maintain a modest and unsecured LOC which you draw down on every once in a while (even if you don’t need the month) and pay it off within a week. You pay a few bucks on interest but may save your thousands if it knocks basis points off your mortgage.

By: Customers Revenge

Customers Revenge — Wed, 03 Oct 2007 13:53:06 +0000

I disagree with this advice in principle. Although I am not a bank insider I am speaking on experience with my bank. My intuition is that 3 to 5 credit cards is way too many. I have one credit card with a high limit and points that I use all the time. I have one other credit card with a very low limit that I can use if something happens to the first credit card. I pay all my credit cards to zero every month.

I used to have two credit cards with a large limit because I once did a low-interest credit card loan to play the stocks for a year and after it was paid off I left it active. Then I had to get a mortgage. The mortgage agent pulled all my credit history and as we went over the calculations she used them as if I had maxed out all my available credit. I asked her why and she said it was because the bank wouldn’t know how I would come up with my downpayment so they just play it safe and assume I would borrow 30K on all my credit cards, which adds something like $450 per month to my loan servicing, which put me, at the time, very close to the limit for my mortgage.

Since then I cancelled all my un-needed credit cards. Even though I do participate in the low interest deals if they come up and they’re good enough. I always cancel the card if they won’t renew the deal upon finishing. Now I have about 1/2 or 1/3 of the credit cards that I used to have and I’ve since purchased 2 investment properties with zero trouble.