1*Never thought about the ratio part. 2*Although in my case it would only matter if I go for a mortgage. ========================= 1*Ratios lower scores lower scores equal jacked insurance and interest rates. 2* Avoiding going for a mortgage won't help 1*
When it comes to having many high limit cards, if someone with a low annual income has a bunch of cards with high limits and applies for a mortgage or auto loan, it will definitely flag the bank. I have talked to quite a few loan officers who have said they have denied loans simply for that reason, because someone could go out and spend well above what they should be. If you have a high income and want lots of high limit cards, then no problem. Otherwise, even if your balance to credit limit ratios are good but you have a lower paying job and lots of available credit, you may have to do some explaining. The best thing to do is just carry low balances on the preexisting cards if you don't need any others and if possible, make a large payment on a higher balance on your card prior to the statement closing date so the higher balance doesn't report to the credit bureau.
Why its'a good idea: 1. Flexibility to move debt around to take advantage of the best deals. 2, Insurance against predatory APR hikes based on using a high percentage of available credit. 3. Better ratios to boost credit scores resulting in more favorable deals on auto loans and mortgages. If a mortgage lender thinks you have too much available credit for income, you can always reduce your limits to get the mortgage. 4. Available funds for emergencies, extended layoffs, or decreased earnings for whatever reason. Having savings to get through emergencies is an excellent idea. but why not have savings and credit so you decide when to charge expenses or deplete your cash. You could get a 0% deal while earning interest on savings or maybe you don't want to cash out an investment too soon just because you need to eat. When it could be a bad idea: 1. You are a compulsive spender. 2. You're not a compulsive spender in the sense of having a psychological disorder but think you should get a bunch of stuff you don't really need because you have lots of credit available, interest rates are low and you feel like you're getting a deal. Also it should be no problem swinging the monthly minimum payments on 15K or 20K until things get better. This is what the fed wants you to do to stimulate the economy but from a personal finance standpoint, this idea sucks. 3. You're Ok but your spouse isn't. Watch out if the marriage falls apart because you lose whatever moderating influence you once had over your spouse's behavior. While you're hangin out at the thunderbird motel (that cheap one on the edge of town) with your replacement love object, your spouse is finding the right kind of therapy in shopping malls and resort hotels. Maybe a practical person wouldn't do this but those cards could be awfully useful to set up the post-you. This is going to take alot of money and it might even teach you a lesson.
: Why have a lot Sorry Folks, but we use our credit to make money. The more the better, credit makes money. Use it wisely, use it responsibly, but use it. www.creditsense.com
Re: Re: Re: Re: Re: Why have a lot of h If you control your spending and pay in full then your APR is 0%. Credit is great for the expensive things that you need to pay over time and the rewards that come with some cards.
I knew a guy that had high limits for his business. He would find a 'distressed' property. Buy it with his credit cards-had over $150,000 credit lines all together. He would spend no more than 45 days fixing the property up. Then he would go to the bank, get a mortgage on the nicer property, pay off his cards, and rent them out. He was making a lot of money doing this. Especially if he could make all the repairs in 30 days so no interest. He needed the higher limits to do this.
Excellent point. Last time i checked, most people had alot more "borrowed" money placed into their house, than on their credit cards. And i've rarely found any successful business or wealthy person who didn't make their fortune through "other people's money" ie. credit in one form or the other. Really smart people with the necessary discipline use credit wisely (see creditworks) and then become their own banks in one form or the other. . .
I am suggesting that once you get to where you have a large cash reserves, you will not need credit from a bank or lender. There are investors who pay cash for homes, and these are the vets who may initially have started out with loans, but over time their dependency on banks decreased. Besides if you are buying homes and not cashing out consistently, you will hit a limit with the bank and they will cut you off. So, once you can buy properties, business, or other investments with cash at steep discounts. You will become financially free and if you have any economic downturns, you make even more money since you have cash. This low rates will not last forever and cc may not have 0% offers in the future. Who knows they could even disallow BT transfers if the things get too bad for the companies. Consumers just do have any control over as how lending or cc companies operate? They can change the rules at anytime w/o our approval. I am just suggesting in the longrun, it would be better to rely on yourself financially, instead hoping that cc companies or lenders will have your best interests at heart.
ok fine. But i think most of the people with very high limits on this board have a keen business sense, self-discipline, and use their credit responsibly. There's nothing wrong with having hundreds of thousands of dollars in credit if they can handle it and also have their financial security also handled. Again, if you looked out the top billionaires list every year, i guarantee you they have hundreds of millions or even billions of dollars owed to others in credit in one form or the other. Knowing how to use money to make money or save money is what keeps the entire world economy moving and makes fortunes and livelihoods every day.
Why have a lot of high limit cards? So that when you apply for that one rewards card that is supposedly all you need, you will get a higher limit on that one card.
1*Never thought about the ratio part. 2*Although in my case it would only matter if I go for a mortgage. ========================= 1*Ratios lower scores lower scores equal jacked insurance and interest rates. 2* Avoiding going for a mortgage won't help 1*
1*Never thought about the ratio part. 2*Although in my case it would only matter if I go for a mortgage. ========================= 1*Ratios lower scores lower scores equal jacked insurance and interest rates. 2* Avoiding going for a mortgage won't help 1*
2, Insurance against predatory APR hikes based on using a high percentage of available credit. daveberk ======================== 2* Add to this lower scores lead to higher insurance. THE END ** *** ** LB 59 """""""""```~~~```'""""""""" http://www.dancingbush.com/ http://www.funnygreetings.com/smile365.htm
Re: Re: Why have a lot of high limit cards? Too Much-- You contradict yourself. And George is absolutely right. The only CRA that really rewards low debt is Experian. I really believe that FICO likes to see usage. As long as the trend is downward, they reward you.
If you pay cash for a property, Pooky, you have thrown away one of the beauties of real estate investing-- LEVERAGE. If you put 20K down on a 200K property and it rises 10% in value the first year-- you just doubled your money! If you paid cash, you would only make 10% Smart investors continually leverage by refinancing, and, as pointed out above, use other people's money to make more.
Calypso, the only problem with leverage is that it also works the same way if prices decline. My point is that less 10% of the pop. are financially independent and that includes the folks on the board and myself currently (hopefully it will change in time). If everyone is so smart and we know about leverage, why is that most folks (90% or more) work 40 yrs. or more and retire broke. My ultimate goal would be have my home paid for and eventually get to the point where I will pay cash for my home and cars. Now what I am saying is that with ample cash folks can get steep discounts for homes, businesses, or other investments. If you look at the truly wealthy, they may use their own cash or loans, but most of them make more money during downturns in the economy because everyone else is burdened with debt and do not have ample cash reserves. Now given 2 scenarios: 1. Person A has $30K emergency fund, home is paid for, no other debt at all. Just has food, utilities, etc. 2. Person B has $30K avail. on cc & no savings, has $9K in cc debt, owes $100K on 2yr. old home worth $110K, $20K in studen loans, owes $18K on new car. Now what happens when life happens, both folks get laid off from same company and they both make same income. Which person do you want to be? Well this is the scenario for most of the population and the reason for an increase in bankruptcies and foreclosures. I really do not have a problem with leverage, but the overuse w/o the cash to back it can cause problems. I just think the best lender you can ever have is yourself. I invest in real estate part-time, so I know about leverage. Sometimes you just can not forecast all the problems, that could happen in life and being highly leveraged at the wrong time can be painful. Ask me how I know? Lastly, if you get to the point financially where you have no debt and can pay cash for homes or investments at steep discounts, you do not have to buy as much as other investors because you do not have any debt service/burdens and you're not overly leveraged.
why is that most folks (90% or more) work 40 yrs. or more and retire broke. Pooky ================= Because the bankers and insurers got their money. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
why do most folks (90% or more) work 40 yrs. or more and retire broke. Pooky ================= Also Poor Assett managment & lack of planing. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
