articles.moneycentral.msn.com — A no-limit credit card can damage you, even if you pay it off in full every month, because the most commonly used method of determining risk is flawed. The problem is something called credit utilization. If the card has no limit, the credit-scoring company can't make the credit-utilization calculation, and that has an effect on credit scores.
Aug 31, 2006 View in Crawl 4
idntunknwnAug 31, 2006
This problem doesn't affect just no-limit credit cards. It's been reported recently that a number of credit card companies simply choose not to report your credit limit. This can also hurt your credit score by about 20 to 50 points.This practice is presently being challenged in court. More information can be found here: <a class="user" href="http://www.washingtonpost.com/wp-dyn/content/article/2006/06/30/AR2006063000609.html">http://www.washingtonpost.com/wp-dyn/content/article/2006/06/30/AR2006063000609.html</a>So it's about time that I apply for a credit card. Anyone have suggestions for reliable companies to apply to?
fucknutAug 31, 2006
The credit score consists of: * Payment history (35% of the rating) * Length of credit history (15%) * New credit (10%) * Types of credit used (10%) * Debt (30%)Notice that income is not a factor!!!
glynneAug 31, 2006
How about the more insidious practice of a card not reporting your limit to the credit reporting agencies. That way it keeps your score down so you have to stay with that card. What large card does this? CapitalOne. See:<a class="user" href="http://clarkhoward.com/shownotes/2005/02/15/">http://clarkhoward.com/shownotes/2005/02/15/</a>Under the heading: Capital One warningCute commercials, poor business practices.Don't you love how commercials don't tell you the whole story?
twstdrootAug 31, 2006
@hammydude - I use my no limit card for work travel expenses. It really sucks to be thousands of miles from home and go to check in to the hotel and find out you've maxed the card out. Sometimes it takes some time to get the reimbursement check...
darkwatcherAug 31, 2006
Can across this see how you stack up!1. Average household income before taxesPoorest 20%: $9,168Middle 20%: $41,614Richest 20%: $132,158The average American household makes $54,453 a year before taxes. 2 Average annual expendituresPoorest 20%: $17,837Middle 20%: $36,980Richest 20%: $83,710The average American household spends $43,395 a year. 3 FoodPoorest 20%: 16.6% of total spendingMiddle 20%: 14.5%Richest 20%: 11.5%The average American household spends 7.7% of their budget on food at home, 5.6% eating out, and 1.1% on alcoholic beverages. 4 HousingPoorest 20%: 37.9% of total spendingMiddle 20%: 32.8%Richest 20%: 30.4%The average American household spends 18.4% of their budget on shelter and 3.2% on property taxes. 8 TransportationPoorest 20%: 14.7% of total spendingMiddle 20%: 18.5%Richest 20%: 17.4%The average American household spends 7.8% of their budget on vehicle purchases, 3.7% on gasoline and motor oil, and 1.0% on public transportation.6 UtilitiesPoorest 20%: 9.6% of total spendingMiddle 20%: 7.8%Richest 20%: 5.1%The average American household spends 2.5% of their budget on electricity, 2.3% on telephone service, and 1.0% on natural gas.7 ClothesPoorest 20%: 4.7% of total spendingMiddle 20%: 4.0%Richest 20%: 4.4%The average American household spends 1.7% of their budget on women and girls' clothing, .9% on men and boys' clothing, and .8% on footwear.8 Health CarePoorest 20%: 8.0% of total spendingMiddle 20%: 6.8%Richest 20%: 4.6%The average American household spends 3.1% of their budget on health insurance, 1.5% on medical services, and 1.1% on drugs.9 EntertainmentPoorest 20%: 4.3% of total spendingMiddle 20%: 4.7%Richest 20%: 5.4%The average American household spends 1.8% of their budget on television, radio, and sound equipment, and 1.2% on fees and admissions.10 Insurance and PensionsPoorest 20%: 2.4% of total spendingMiddle 20%: 9.1%Richest 20%: 15.1%The average American household spends 10.2% of their budget on pensions and Social Security, and .9% on life and other personal insurance.
iamthewinnarAug 31, 2006
@shaggtastic"And if you absolutely have to borrow money to buy a car, therefore paying many times what the car is worth over the loans lifetime, well, it seems like a stupid idea to me"I paid 19,000 for my car, I financed 10,000 of that over a 5 year period at 4.7% interest I pay about 22 dollars in interest a month, that is 1320 total extra that i'm going to have to pay. 1320 is not many times what the car is worth.
enigmastratAug 31, 2006
You're right, I did forget it, but I do know about it. Here ya go:You absolutely do not need to borrow money to run a business. I own three and have never borrowed any money on any of them. You may have to start small, but if you devote your profits to business growth rather than giving yourself a big raise, it's amazing how fast a business can grow. You may also want to look into VCs or just small time investors (try not to use family for large investments). The key word is investment. They may not get their money back, but you will do everything in your power to get it back to them. That's what I've got for now. Any more things you may need credit for?
brstilsonSep 5, 2006
"Don't get a credit card. Buy what you can afford, and don't go into debt for anything if you can help it."This may be a shock to you, but most people don't have 100-250k to buy a house when they need to. While this philosophy may have worked in the post-depression 50's, (where the cost-of-living to average-wage ratio was the best it ever was, and when you could afford a house in suburbia and raise a family with a high school diploma) the cost of living is just too high. Cars USED to cost much less than most people's yearly salary, but the gas crisis, labor unions and globalization put a stop to that. Nowadays, saving up the hundreds of thousands of dollars to buy a house when the daily necessities are so expensive is impossible. Mortgages, loans, and credit have a bigger role in society, and if prices keep skyrocketing the way they are now, the role will grow even bigger as time goes on.
tomdlgnsSep 26, 2006
this is the same as having too many open credit cards. its not good for your credit to do that either.
pokey5Sep 15, 2008
Being consumers, we always get the raw end, especially from credit card companies. As idntunknwn previously pointed out, some credit card companies don't choose to report your credit rating which is unfortunate for consumers who pay their credit card bill on time. Before applying for a credit card, make sure you check out the company by doing a simple Google search.Pokey<a class="user" href="http://www.creditcards.com.au">http://www.creditcards.com.au</a>
stickyhoneyNov 19, 2008
I really hope that Obama brings in tougher laws against credit sharks that charge over the top rates. Credit Cards imo should be used to give relief when paying bills/making purchases I don't think they should be thought of as "additional money" otherwise you'll get yourself into trouble.Stu<a class="user" href="http://cr.editcards.com.au/">http://cr.editcards.com.au/</a>