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Discussion Starter · #1 ·
As the title asks: will having 2 credit cards, used every month with the balances paid off in full before each due date cause one's credit rating to increase faster than using only 1?
 

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The actual algorithms are proprietary.


But basically have some credit, use a moderate amount (<20% of your limit), and make your payments on time.

As far as managing debt, For credit cards, NEVER carry a balance month to month. At worst get a line of credit and pay it off every month.
As soon as I get a credit card bill, or any bill, I make an online payment (deferred to 3 business days before the due date) from the Line of credit. I've missed a handful of bills over the last decade with this process.
 

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The credit agencies use the term "proprietary" because they don't want it revealed what they really do.

The credit agencies work for the lenders....plain and simple. It is the lenders who pay the credit agency.

After decades of borrowing and repaying many loans and debts, and never missing a payment, I was told by a bank lender that I had "the highest credit score she had ever seen". I knew nothing about credit scores so I did some research into why someone like me who borrowed constantly and repaid religiously would have such a high credit score.

It turns out that credit card companies earn the bulk of their profits from interest and late payment charges. They love people who faithfully make their payments a day or two late so they can add an additional charge to the bill every time they do. That is why late payments aren't recorded at the credit agencies until they are 30 days past due. They don't want to "kill the golden goose" of credit card lenders.

Credit card companies also get paid a small fee for each transaction by the retailer, but that income is far secondary to the above. People who use their credit cards to gain points and then pay off the balance cost the credit card companies money. They aren't charities.

One of the questions on an application for a credit card is often......."do you normally carry a balance" ?

They ask that question for a reason. A person who carries a balance and never misses a payment is their bread and butter. It is the kind of customer the lenders will seek out with offers of credit.

In the credit industry, a person who uses a credit card and pays off the balance each month is known as a "deadbeat". They will accept that type of customer for the retail fees paid by vendors, but that kind of borrower isn't a high priority for them.

They will take the business, but for obvious reasons they really covet customers who don't pay off the entire balance each month.

That is not to say that people "should" carry a debt and pay interest charges but it is what it is. It is much better to have a slightly lower credit score than to owe debt.

Many people who declare bankruptcy have a high credit score shortly before they declare bankruptcy.

Without a high credit score, the people would never have been able to borrow all that money in the first place. It was their ability to borrow that got them into trouble.

The worst mistake people make is to have a low limit credit score and use 100% of the limit.

If a person has a $1,000 credit limit and has a balance of $1,000........they have used 100% of their available credit.

If the same person has a $5000 credit liimit and has the same balance of $1,000.....they have used 20% of the credit.

So although I advise people to agree to credit increases because it helps their credit score, they need to avoid the temptation of using all the available credit.

To get a high credit score, a person also needs to have different kinds of credit on their credit report.

A credit card, a loan, a mortgage.....various forms of credit from the past is the goal.

A credit limit of $1,000 or $2,500 is of little help to a credit score. The amounts are too low.

And now you know the rest of the story.
 

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A funny true story......

Years ago I took my son and 3 of his friends to a Raptors basketball game in Toronto.

When we arrived there was a rep at the door giving away a free Raptor t-shirt for applying for a Raptors labelled credit card.

So I applied and got a free t-shirt........but I still had 3 other boys with me with no shirt.

Wandering around the concourse I discovered another rep offering the same deal, so I applied again and got another t-shirt.

Turns out they had a rep in each corner of the building, so I applied for 2 more credit cards and got 2 more free t-shirts.

Great.......a t-shirt for each of the boys.........saved me buying 4 shirts as souvenirs.

We had box seats at mid-level in an arena with a small crowd at the time, and during halftime they brought out a cannon that fires out t-shirts. My son waved and waved and they shot a t-shirt practically right into his lap........so now I had a t-shirt too.

A few weeks later, my wife picked up the mail and there were 4 new credit cards from Mastercard.

She asked what was going on with all the cards and I told her the story. She cancelled all the cards immediately.......LOL.

Many years later today, those credit cards are still on my credit report. All opened and cancelled.

It looks kind of odd and the strange part was they all had different credit card limits.
 

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I just cancelled my Amex SPG Marriott card prior to the annual renewal. It had a fee of $120. and provided on free night in an SPG hotel. It more than paid for itself every year.

We originally signed up for the 50,000 free Marriott points that it provided, plus the one free night per year. Those 50K points went a long way to giving us five gratis nights at a hotel in Sydney, Australia. A value to us of $1200. plus.

We will sign up for the card again, after covid when we can travel internationally. That is when the free night really pays off. But when we do...the current offer is 60,000 SPG points, and a waiver of the first years fee.
 

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The credit agencies use the term "proprietary" because they don't want it revealed what they really do.

The credit agencies work for the lenders....plain and simple. It is the lenders who pay the credit agency.
This is the important part.
The job of credit agencies is to let the lenders know if they'll get their money back.
They do this by credit history and predictive patterns.

After decades of borrowing and repaying many loans and debts, and never missing a payment, I was told by a bank lender that I had "the highest credit score she had ever seen". I knew nothing about credit scores so I did some research into why someone like me who borrowed constantly and repaid religiously would have such a high credit score.
They like to say stuff like this.
Really it isnt' too hard to get a perfect credit rating. To be fair, I don't imagine many of us are talking to banks about borrowing, except at mortgage renewal time.


It turns out that credit card companies earn the bulk of their profits from interest and late payment charges. They love people who faithfully make their payments a day or two late so they can add an additional charge to the bill every time they do. That is why late payments aren't recorded at the credit agencies until they are 30 days past due. They don't want to "kill the golden goose" of credit card lenders.

Credit card companies also get paid a small fee for each transaction by the retailer, but that income is far secondary to the above. People who use their credit cards to gain points and then pay off the balance cost the credit card companies money. They aren't charities.
Late fees are a nice bonus, but they also mean higher risk, even if they're only a few days late.

The people that spend $1k/month and pay it off promptly, year after year are a decent customer to have.

In the credit industry, a person who uses a credit card and pays off the balance each month is known as a "deadbeat". They will accept that type of customer for the retail fees paid by vendors, but that kind of borrower isn't a high priority for them.
The credit card company doesn't pay the merchant until after you pay your bill. They then insure if you don't pay your bill in time.
If you're on time, the cost of that insurance to pay the merchant is cheap, if you're late, it's more expensive.

(It may or may not be what people consider insurance, more of a float, but the more it's used the higher the float needs to be).

A good stable of reliable payers is very desirable, I think the stories of "deadbeats" is overemphasized. It's also irrelevant to building a credit rating.

if it's only a few days late, they might not report it to the credit rating = looks like you pay on time.
If they do report it, it shows that you are slightly late, which should be a negative impact.

Really there is no downside to paying on time and avoiding the fees.
In reality the fee is that they don't waive the interest rate on balance.

FYI if you miss a payment by a few days, you can often call in and get it waived, as long as you don't do it often. I've called in a few times, once because the fees were > $50, and at that point, it's worth asking.
 

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This is the important part.
The job of credit agencies is to let the lenders know if they'll get their money back.
They do this by credit history and predictive patterns.


They like to say stuff like this.
Really it isnt' too hard to get a perfect credit rating. To be fair, I don't imagine many of us are talking to banks about borrowing, except at mortgage renewal time.



Late fees are a nice bonus, but they also mean higher risk, even if they're only a few days late.

The people that spend $1k/month and pay it off promptly, year after year are a decent customer to have.



The credit card company doesn't pay the merchant until after you pay your bill. They then insure if you don't pay your bill in time.
If you're on time, the cost of that insurance to pay the merchant is cheap, if you're late, it's more expensive.

(It may or may not be what people consider insurance, more of a float, but the more it's used the higher the float needs to be).

A good stable of reliable payers is very desirable, I think the stories of "deadbeats" is overemphasized. It's also irrelevant to building a credit rating.

if it's only a few days late, they might not report it to the credit rating = looks like you pay on time.
If they do report it, it shows that you are slightly late, which should be a negative impact.

Really there is no downside to paying on time and avoiding the fees.
In reality the fee is that they don't waive the interest rate on balance.

FYI if you miss a payment by a few days, you can often call in and get it waived, as long as you don't do it often. I've called in a few times, once because the fees were > $50, and at that point, it's worth asking.
Even though being late a few days isn’t reported to the agencies, it is recorded in the banks systems. And this can impact borrowing. I’ve seen more than a handful of customers who are 4-5 days late every month.....then they come in for a mortgage, and internally It shows they’ve been late for xxx months.
 

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Credit granters need to protect themselves.

We are big fans of the credit card industry/providers. They provides a great deal of convenience and to some degree protection for those of us that use it as much as possible and who view it as a current obligation that requires immediate payment vs a lending vehicle. The interest rates are typically outrageous. The trick with credit card debt, and all debt for that matter is to understand the terms and know that abusing the terms can be costly.
 

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Even though being late a few days isn’t reported to the agencies, it is recorded in the banks systems. And this can impact borrowing. I’ve seen more than a handful of customers who are 4-5 days late every month.....then they come in for a mortgage, and internally It shows they’ve been late for xxx months.
Didn't know about that.
But the idea that being "more profitable" will help your credit is silly.
 

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As the title asks: will having 2 credit cards, used every month with the balances paid off in full before each due date cause one's credit rating to increase faster than using only 1?
Don't pay off each month, you should use both cards, and do a lot transactions, and keep certain amount of balance. Banks like to take interest form you. My brother did this way, and he has tons of credits which he used in stock market and make a fortune.
 

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Don't pay off each month, you should use both cards, and do a lot transactions, and keep certain amount of balance. Banks like to take interest form you. My brother did this way, and he has tons of credits which he used in stock market and make a fortune.
Wrong. You should pay off each month. I have always done this and my credit rating is excellent.
 

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Discussion Starter · #14 ·
What is the best use of a credit card to assist in improving one's credit rating: use the card in the month and pay fully before the statement is issued OR use the card, wait for the statement then pay?

For example: I rec'd a new MasterCard which I am able to use the card's app to view my transactions. For the last 2 weeks I had $300 on it. I paid it off fully. Once I seen the balance was at zero on the app I used again for $70. Got my first statement it shows the $300 incurred but the paid a few days later, leaving $70 as my current balance owing. Should I have not paid in full within the same month before the statement came out?

Sorry for the dumb questions - my parents did nothing to show me how to budget and/or use credit wisely.
 

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It depends on your credit limit.

If the $300 spend was less than 30% of the available credit it makes no difference

If the credit limit is $300 and you spend $300 and then it gets reported as 100% usage.

In that case, you best pay it off before the statement date.......not wait for the due date.

I recommend people accept credit increases to create more room to manouvere.

Using the $300 scenario, if you raise the credit limit to $3000......you are only using 10% of the available credit.....which is good for credit scores.

On the other hand if you owe 100% of your credit limit.......your score will drop.
 

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Discussion Starter · #16 ·
It depends on your credit limit.

If the $300 spend was less than 30% of the available credit it makes no difference

If the credit limit is $300 and you spend $300 and then it gets reported as 100% usage.

In that case, you best pay it off before the statement date.......not wait for the due date.

I recommend people accept credit increases to create more room to manouvere.

Using the $300 scenario, if you raise the credit limit to $3000......you are only using 10% of the available credit.....which is good for credit scores.

On the other hand if you owe 100% of your credit limit.......your score will drop.
My card has a limit of $500. I just came out of a consumer proposal and did not realize that I should have been using a secured credit card during my proposal. Thankfully I was able to obtain an unsecured card, not high but it is something. I am also in the midst of obtaining a secured credit card with a different card carrier - thinking of maybe going with a $300 limit on that one and using both cards throughout the month.
 

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What is the best use of a credit card to assist in improving one's credit rating: use the card in the month and pay fully before the statement is issued OR use the card, wait for the statement then pay?
I have only paid off some of what was owing early to have enough room to charge something else. These days, I'd ask them to raise my limit.

Part of the CC deal is having until the date on the statement or line access to pay. Paying off what is owed in time or a bit early (i.e. program the payment for 3 business days before the deadline) on a regular basis is what will demonstrate your credit worthiness.

Keep in mind that the statement usually arrives well more than three business days before the due date. Where one has online access, one can check at anytime one wants.


Cheers
 

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It depends on your credit limit.

If the $300 spend was less than 30% of the available credit it makes no difference

If the credit limit is $300 and you spend $300 and then it gets reported as 100% usage.

In that case, you best pay it off before the statement date.......not wait for the due date.

I recommend people accept credit increases to create more room to manouvere.

Using the $300 scenario, if you raise the credit limit to $3000......you are only using 10% of the available credit.....which is good for credit scores.

On the other hand if you owe 100% of your credit limit.......your score will drop.
Keep your balance below 30%, always pay it off before the due date.

Don't accept too many credit increases.
Credit availability/income is a parameter.

One personal finance guy advises to pay off your credit card within the week, it's part of his weekly routine. He basically thinks of a credit card as a debit card, with better fraud protection.
Personally I NEVER use my debit card.
 

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My card has a limit of $500. I just came out of a consumer proposal and did not realize that I should have been using a secured credit card during my proposal. Thankfully I was able to obtain an unsecured card, not high but it is something. I am also in the midst of obtaining a secured credit card with a different card carrier - thinking of maybe going with a $300 limit on that one and using both cards throughout the month.
A secured credit card will help your credit score if the company reports to the credit agencies.

Accept any offers for a credit limit increase. It means you are making progress.

There may come a time when you wish you had access to the credit for an emergency.

If you are spending close to the credit limit......pay it off well before the statement date or it will show up as 100% use on your credit report after that date. That date ISN'T the payment due date. It is the date the credit card company issues you the statement.

If you owe 80% of your credit limit on the statement date that is what they report to the credit agencies.
 
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