Surprised that nothing has been mentioned yet in the wake of the recent Equifax blow up so I figured that this would be as good of a time as any to start a credit discussion thread. It seems like most people understand that having a good credit report is important, but don't quite understand what makes up a good credit score, how to protect that good score, or how to leverage that into better rates and rewards.
Disclaimer
I don't work in the finance industry and am far from an expert on this subject, but I have spent a great deal of time studying how credit reports work and taken up the hobby of reaping a ton of rewards using my credit in the form of points, miles, and cashback.
Background
In the last year I've opened up about 12 new credit card and I've had probably 30+ new cards in the last three years. In the process my credit score has increased (~820/850 for all three credit bureaus), gotten cash back or gift cards to help cover day to day expenses or home improvement projects (new carpet/appliances) and have traveled taken several amazing trips this year with my family that I couldn't afford to do otherwise. For example we have been to Cancun once this year (all inclusive!! @ #6/176 rated hotel) and are going back in November (12 nights total), Hawaii upcoming in March (10 nights @ #2/48 rated hotel on the Big Island), and FL for 4 nights, Washington D.C. for 3 nights plus twenty other nights while road tripping with another 10 flights to visit family/friends this year for a grand total of $2,000 spent on travel this year. My estimate is that this would've cost me close to $30,000 out of pocket if I was paying for this in cash and that was just the last 12 months of travel.
Why I'm posting this:
I figure that the people on this board do more traveling than the average person during their vacation time visiting Vegas, a variety of meetups, or other casinos across the U.S. so maybe there are some other "churners" (name for people who whore bank bonuses) out there. Even if you are not I figured that maybe this information in this thread would help reduced your family, or individual cost to travel so that you could have more money at a meetup to play with, attend more frequently, or perhaps attend your first meetup!
General Info:
Per FICO your credit score is made up of five major factors:
Payment History:
The biggest chunk of your credit score basically do you pay your bills on time. This is the most important thing: DO NOT MISS A PAYMENT!! Even one missed payment can damage your credit report since this is the largest source of your score.
Amounts Owed:
The Debt to Credit Utilization category that basically says what balance you are carrying vs. what your overall credit line is. The higher the utilization the higher risk you appear to be to lenders. Ideally you would like to keep this number below 20%. This is where having a ton of credit cards helps your credit score as having a ton of cards you don't use helps keep that debt to credit utilization score low across the board even if you have one card that might be carrying a (hopefully temporary) high balance.
Be forewarned that credit companies do not report your utilization at the end of each of your statements/billing cycles, but rather report once a month. Ex. If you made a large purchase $5,000 purchase of your $8,000 credit limit on October 10, and are going to pay it in full on your payment date on November 5. The credit company might not report that it was paid off until November 29, so if you go to buy a major item on November 15, even though you paid that balance off a lender might view you as a high credit risk since that balance could still be showing.
Length of Credit History:
Lenders love to see that you have a long history of paying on time to other lenders. Things like mortgages, auto loans, student loans all will assist (again, only if you pay on time) in this regard. Basically the rule of thumb is never close your oldest credit card account. If these accounts have annual fees that you no longer want to pay try and see if the lender will change your account to something without an annual fee.
New Credit:
This is basically "requests for new credit" or the number of hard inquiries that your account has over the last two years. Generally lenders make hard pulls for mortgages, auto loans, and credit cards. Banks do not like to see you looking around for a lot of new credit. If you apply for a new credit card expect a small temporary "ding" to your credit score in the range of 2-10 points that will later be countered by paying this account on time and improve your score.
Credit Mix:
Don't put all of your eggs in one basket is the idea here. The idea is to show lenders that you are responsible for a variety of different types of credit (Mortgage, Student Loan, Auto Loan, Personal Loans, Credit Cards are all different types). Tied for the smallest portion of your credit score and generally not worth worrying about as you probably have opened various accounts in your life that are already showing up in this area.
Know Your Score:
https://www.annualcreditreport.com/index.action
You are entitled by law to a free credit report from each bureau (TransUnion, Equifax, and Experian) each year. If you haven't pulled your information recently I would highly recommend doing so in the near future to make sure you information is accurate. Some credit cards allow you to pull your information more frequently, but this site is a way to get your information once a year if you have no other means. NEVER enter your credit card into a site and pay for a credit report as there is no reason to do in today's day and age.
Great Sites
http://www.creditkarma.com/
Gives an approximation of your credit score based upon TransUnion data.
https://www.creditsesame.com/
Gives an approximation of your credit score based upon Experian data. Free, no cost to use, no credit card information needed to sign up. This site and credit karma are both "soft" pulls and will not harm your credit score in anyway. No other institution will see that you checked your score so you can check it as often as you like. No reason not to keep tabs on your score, especially given the current situation.
https://milesfeed.com/
Awesome site that lists all of the "new" travel site updates in one place. I use this site often to see keep a breast of new cards, offers, and deals that can save me $. The site links you to other blogs, websites, etc. that are based off of new traffic and referral bonuses to make revenue so you do have to take some of the "pitches" with a grain of salt knowing that the author could be getting some sort of kickback. I just had a friend publish an article on the The Points Guy (TPG) website this week so that was pretty cool to see that get kicked up on the newsfeed.
https://www.reddit.com/r/churning/
The Reddit communities mega "churning" area where you can keep up with new offers, changes to policies, and general information regarding bank bonuses, credit card, miles, points, etc.
Disclaimer
I don't work in the finance industry and am far from an expert on this subject, but I have spent a great deal of time studying how credit reports work and taken up the hobby of reaping a ton of rewards using my credit in the form of points, miles, and cashback.
Background
In the last year I've opened up about 12 new credit card and I've had probably 30+ new cards in the last three years. In the process my credit score has increased (~820/850 for all three credit bureaus), gotten cash back or gift cards to help cover day to day expenses or home improvement projects (new carpet/appliances) and have traveled taken several amazing trips this year with my family that I couldn't afford to do otherwise. For example we have been to Cancun once this year (all inclusive!! @ #6/176 rated hotel) and are going back in November (12 nights total), Hawaii upcoming in March (10 nights @ #2/48 rated hotel on the Big Island), and FL for 4 nights, Washington D.C. for 3 nights plus twenty other nights while road tripping with another 10 flights to visit family/friends this year for a grand total of $2,000 spent on travel this year. My estimate is that this would've cost me close to $30,000 out of pocket if I was paying for this in cash and that was just the last 12 months of travel.
Why I'm posting this:
I figure that the people on this board do more traveling than the average person during their vacation time visiting Vegas, a variety of meetups, or other casinos across the U.S. so maybe there are some other "churners" (name for people who whore bank bonuses) out there. Even if you are not I figured that maybe this information in this thread would help reduced your family, or individual cost to travel so that you could have more money at a meetup to play with, attend more frequently, or perhaps attend your first meetup!
General Info:
Per FICO your credit score is made up of five major factors:
Payment History:
The biggest chunk of your credit score basically do you pay your bills on time. This is the most important thing: DO NOT MISS A PAYMENT!! Even one missed payment can damage your credit report since this is the largest source of your score.
Amounts Owed:
The Debt to Credit Utilization category that basically says what balance you are carrying vs. what your overall credit line is. The higher the utilization the higher risk you appear to be to lenders. Ideally you would like to keep this number below 20%. This is where having a ton of credit cards helps your credit score as having a ton of cards you don't use helps keep that debt to credit utilization score low across the board even if you have one card that might be carrying a (hopefully temporary) high balance.
Be forewarned that credit companies do not report your utilization at the end of each of your statements/billing cycles, but rather report once a month. Ex. If you made a large purchase $5,000 purchase of your $8,000 credit limit on October 10, and are going to pay it in full on your payment date on November 5. The credit company might not report that it was paid off until November 29, so if you go to buy a major item on November 15, even though you paid that balance off a lender might view you as a high credit risk since that balance could still be showing.
Length of Credit History:
Lenders love to see that you have a long history of paying on time to other lenders. Things like mortgages, auto loans, student loans all will assist (again, only if you pay on time) in this regard. Basically the rule of thumb is never close your oldest credit card account. If these accounts have annual fees that you no longer want to pay try and see if the lender will change your account to something without an annual fee.
New Credit:
This is basically "requests for new credit" or the number of hard inquiries that your account has over the last two years. Generally lenders make hard pulls for mortgages, auto loans, and credit cards. Banks do not like to see you looking around for a lot of new credit. If you apply for a new credit card expect a small temporary "ding" to your credit score in the range of 2-10 points that will later be countered by paying this account on time and improve your score.
Credit Mix:
Don't put all of your eggs in one basket is the idea here. The idea is to show lenders that you are responsible for a variety of different types of credit (Mortgage, Student Loan, Auto Loan, Personal Loans, Credit Cards are all different types). Tied for the smallest portion of your credit score and generally not worth worrying about as you probably have opened various accounts in your life that are already showing up in this area.
Know Your Score:
https://www.annualcreditreport.com/index.action
You are entitled by law to a free credit report from each bureau (TransUnion, Equifax, and Experian) each year. If you haven't pulled your information recently I would highly recommend doing so in the near future to make sure you information is accurate. Some credit cards allow you to pull your information more frequently, but this site is a way to get your information once a year if you have no other means. NEVER enter your credit card into a site and pay for a credit report as there is no reason to do in today's day and age.
Great Sites
http://www.creditkarma.com/
Gives an approximation of your credit score based upon TransUnion data.
https://www.creditsesame.com/
Gives an approximation of your credit score based upon Experian data. Free, no cost to use, no credit card information needed to sign up. This site and credit karma are both "soft" pulls and will not harm your credit score in anyway. No other institution will see that you checked your score so you can check it as often as you like. No reason not to keep tabs on your score, especially given the current situation.
https://milesfeed.com/
Awesome site that lists all of the "new" travel site updates in one place. I use this site often to see keep a breast of new cards, offers, and deals that can save me $. The site links you to other blogs, websites, etc. that are based off of new traffic and referral bonuses to make revenue so you do have to take some of the "pitches" with a grain of salt knowing that the author could be getting some sort of kickback. I just had a friend publish an article on the The Points Guy (TPG) website this week so that was pretty cool to see that get kicked up on the newsfeed.
https://www.reddit.com/r/churning/
The Reddit communities mega "churning" area where you can keep up with new offers, changes to policies, and general information regarding bank bonuses, credit card, miles, points, etc.
Looking at getting a '14-'15 328i. CPO with low miles and a lot of warranty left.
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