Mistakes: 1 - Having high credit utilization 2 - 0% APR trap 3 - Blindly believing all credit card content 4 - Missing a payment 5 - Not treating a credit card like a debit card 6 - Using the wrong credit cards ( a - low rewards, b - earning cash back instead of points/miles) 7 - Closing an old No Annual Fee credit card
Completely agree with you on Mistake #3. It's similar to investing in Stocks- Don't always believe in the most hyped up Credit Cards out there, but instead base your own decisions on your own spending & what fits well into your travel habits. Love the transparency & great video as always Daniel!
Hi Daniel 👋. Been sending all your videos to my younger sister. She's in her 20s and I don't want her to make the same mistakes i did. Your videos are so helpful.
Actually, you can tell your brother to upgrade that Wells Fargo college credit card to either an Active Cash or Autograph card. I had the same exact card, and I found out from Wells Fargo that I can actually upgrade it to either of those actually quite good cards. I picked the Autograph card to use as my gas and transit card with 3% cash back(also gives 3% on groceries and travel), but Active Cash giving 2% back on everything is nothing to sneeze at either. My sister did the same thing.
One of the mistakes that I have seen my friends make (especially being an international student in the US) is getting a bunch of store credit cards like Macys, bestbuy etc during thanksgiving., not realising how it hurts them.
Thanks Dan, for providing concise information on credit card usage mistakes. Being transparent is such a fresh and welcome approach to addressing this industry. Kudos to you!
Mistake #3 was so genuine. I remember watching videos promoting a certain credit card company as “good” that many of us know are not good. Also, all of our viewpoints are based on our opinions, so it is important to definitely research and develop your own opinions to make a decision that’s right for you. Congrats on the SoFi sponsor!! I love to see big moves like this 🙌🏾 🙌🏾 I make mistake #6 sometimes still 😂😂. I went to Target the other day and charged my purchase to my CFU instead of using my Discover It card with Apple Pay since that’s my current 5% cash back category 😩. Great video as always Daniel!
This video is great, concise, easy to understand, and transparent. You're one of the few credit card channels that's not pushy with the selling, elitist, or unnecessarily secretive with only telling 10% of the info before asking you to join their group or mailing list. Thanks for being the change I want to see in this credit card community.
Thank you so much Lisa! I try to provide as much value as I can! I'm sure I'll eventually have some newsletter or other things people can sign up for, but I'm gonna give all value for free here on my channel 👍
I liked how you mentioned we all need to do our own research. I think that advice applies to more than just credit cards and it’s wise to always do your own research, no matter the subject, but especially credit cards. Genuine, solid content as always Daniel!
Hey Daniel, thanks for the great videos. I was wondering if you could make a video explaining what it means to freeze your credit and the pros and cons of doing so? Again thanks for the great content!
I totally agree with the first one, which is to keep utilization low. By the time I only had my first Discover It card with 2000 $ credit line, I almost used up every month and never pay early. So the credit score was only 650~. Right soon I paid early just only once, my score went up to 720..
I would say for mistake #5, I’d re-word it to say don’t use your credit card as an extension of your income. I’m someone who uses my credit card for everything and pay it off every week and it’s got me a 750 fico so far. Either way awesome video!
Thanks for your video(s) been watching all afternoon. I am torn on one concept…paying in full versus having a low utilization amount reported but then paying before the due date. Don’t recommend doing both?
Having more than 1 or 2 credit cards is what killed me. I had a 780 score and maintained it for almost 5 years, I got cocky and opened up a total of 10 credit cards. Now I'm in trouble. I maxed out 5 of them without even realizing it, my score right now is 580. It dropped to that in just a couple months.
Opening that many cards that quickly and maxing them out will definitely drop your score - I would pay work to pay those off immediately and then stop using credit cards because the debt and interest is not worth it!
Great info!! Is it possible to create a video that goes more in-depth on the different strategies to keep old credit cards open? I’ve heard things like automating small Amazon gift card purchases to keep old credit cards active without the actual work. I think this would be a great video!!
I know I can't believe how fast time flies from when I was around 2K subs! Thank you for the encouragement to get me to where the channel is today - I can't wait to keep growing!
Question. At what point does hard credit checks negatively start to hurt you. Second question when getting first buisness cards are the credit checks seen in the same negative way against you. Whats the best approach to walk the line on this issue. Thank you.
Hard inquiries will drop your score by maybe 5-10 points or so in the short term, but the effect quickly wears off over the next few months after opening a next credit card. The hard inquiry then falls off your credit report after 24 months. And typically business credit card applications will also come with a hard inquiry on your personal credit. It depends on the issuer though. This can also have that same small drop in your score in the short term which quickly recovers - so hard inquiries are nothing to be worried about over the long run 👍
Hi from Brazil. It's a shame that SoFi doesn't accept ITIN to apply for checking/saving/credit cards. MAYBE I'll try when I get my SSN. Maybe not... Regards
One thing you didn’t discuss for mitigating high utilisation that I’m curious about is charge cards. Is it true that if you have a card without a hard limit (let’s say an Amex with no preset spend limit) that they don’t report utilisation so you can feel free to put lots of charges there and it won’t impact utilisation and in turn your credit score? I think paying down 95%+ before statement close is the safer bet but was just curious whether or not this was true since I feel I’ve seen conflicting advice
I disagree with the first point. Only the most recent utilization is used to calculate your credit score. Prior utilization percentages don't matter so while it can improve credit scores, it does not actually help build credit. Your credit isn't going to get pulled every month and you can simply lower utilization before you expect to apply for a loan or credit card. Not to mention having very low utilization may make it more difficult to get credit limit increases. Giving out higher limits is more risk for the banks and having lower utilization shows them you don't really need it. It isn't as if the credit limit is limiting your spending on the card so the banks aren't missing out on interchange fees. On the contrary if you max out the card halfway through the statement period and stop using the card entirely while paying it off every month, that is half a month of time they weren't making money on interchange fees due to a low credit limit. I am not saying low utilization is wrong, but I have seen too many people obese over it more than they should to the point you can say they are making a mistake in the opposite direction.
The 1-2% utilization is just wild. It appears counterintuitive to have a credit card if the usage is too low. Perhaps for someone who has many credit cards like Danile, he can live with that miniscule utilization but it's a stretch for many.
Daniel I wish you could make some other videos covering personal financing areas like checking and saving accounts, stocks, crypto and stuff. I particularly liked the one about best checking accounts with highest APYs. Thank you for the video though.
They should make a new rule for old cards. Its like you have a VCR and now it's absolute so why world you keep it there better technology. You should be able to close old credit cards without plenty to open new ones or to reduce the amount you have in wallet.
I just recently paid off my student loans and my credit score immediately dropped 70 points haha I am assuming this is because my credit history went from over 7 years to 2 years since my student loan account closed?
Addressing mistake 2, I think there are two cards that are good for everyone(assuming they can use it responsibly): The Capital One Savor One and the Citi Custom Cash. 5% back on any category of choice is just insanely good, and the Capital One Savor One with 0% foreign transaction fees and 3% cash back on both dining and groceries. Basically, if you eat food or travel, and most people do at least one of those, it's solid
I remember doing research for credit cards a while back and I ended up on including these 2 in my future path! The 5% on the custom cash is extremely flexible, and the SavorOne is such a nice card with tons of benefits and the option to pair with the VentureX. Even if you don't get the VentureX it's still a solid card!
So if you have 20,000 credit limit - you charge something for 4,000 during that statement period and you pay off ALL 4,000 before statement end date - you still get considered using 20% of available credit due to the amount - so paying off balance in full doesn’t keep your utilization at 0% given you paid all of it off before close?
Negative. You are getting the statement end date and balance due date confused. In your example, paying off the $4,000 BEFORE the statement end date will result in your issuer reporting that you have a 0% utilization which is also not good. You want to show that you are using your card, albeit responsibly. Like Daniel was saying, there is a grace period following the statement close date, which is usually another billing cycle that you can find on your issuers credit card statement. I also keep my reporting utilization in the single digits and have a 800+ credit score. It took me awhile for me to understand that concept but once I did it is really easy to understand. Hope this helped!
I have a doubt. If I make the $1,000 spend as your example and then pay it as soon it gets out of the pending status. Will that still impact my credit score negatively?
I have done this...I still do it. As soon as my card is swiped, I pay the pending charge immediately. I have not had a negative impact on my score for doing this.
You’re being overly cautious. Lenders like seeing that you spend. If you let it post to your statement they may increase your credit limit which will help you out. It won’t negatively impact you but you may see more positives coming from letting some money post to your statement balance. However, if you can’t trust yourself with credit cards then it’d be best you continue that practice rather than have a late payment.
@@junboo8730 Also adding to that, utilization holds no memory so if you have high utilization this month and your score drops then simply have it low next month to pick it back up. It’s not that big a deal. Unless of course you plan on using your credit score soon for a loan or another card. So utilization will negatively impact your score but only temporary so don’t worry as you can easily manipulate your credit score. The only real rule of the credit card game is to always pay your balance off in full by the payment due date, in order to never pay a cent of interest.
I really missed the years when FICO was not around. Why would you give someone a credit like of $35K if a person can't use it? Many can't pay back $10, 20, 30k in a cycle. Todays credit cards are not true "credit" cards. Anyway, these are very informative points.
What do y’all think about this. I’m thinking about closing my first credit card. It is now 1 year old but I have 2 late payments and there is an annual fee for it. I’m still new to the credit game and this page has helped me improve my credit. My credit score is now in the high 600 and more than likely I will hit 700s before summer is over. I’m scared that if I close it my score will drop drastically. Should I wait to close it when I’m well into the 700s or gone and close it now??
The late payments will stay on your record for a while, regardless if the account is closed or not. Is that card eligible for a downgrade? Perhaps downgrade it to a no-fee card?
Is having a high credit utilization really such a problem. Once the card is paid off, won't the credit score go back up pretty much right away? Daniel is hinting that it can still hurt credit score for a while, but from other sources I've found it seems the score will revert after 30 days. Be curious if anyone has solid sources on this.
So to clarify, the mistake is "Having High Credit Utilization" and the examples I give are just to point out the high utilization decreases your score and low utilization helps your score. There's plenty of times where I get a slightly higher utilization reported one month that has dropped my score maybe 10-20 points, and then I pay it down to a much lower utilization the next month and it goes right back up. So getting to a low utilization is something that can be quickly corrected on a month to month basis 👍
You should do whatever works best for you to be able to make sure the cards are paid off in full! I like to wait until the end of the billing cycle while having a low utilization like I mentioned
Way too much emphasis on credit card utilization. I just spend naturally and don't worry about it. If I'm thinking of applying for a new card or a loan, wsure I know I can make additional payments to inflate my score by a few points but 825 vs 820 makes zero substantial difference so... why?
Not if you pay it off before your statement close date. Like Daniel was saying, you still want to show some utilization on your card tho so keep that in mind.
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So if you are approved for a $1000 credit limit what you are saying is that you can’t spend more than $30 dollars? Heck even $300 is crap, at that point the banks can keep that crappy plastic to themselves..
Not exactly - so what you can do is you can pay down your balance early. Essentially you could only spend up to $1,000 with that as your credit limit, but you could spend up to that then pay it down, then spend up to it again, and so on. That is what I was pointing out in that example if that makes sense!
Every time you bring up the information in Mistake #1 I feel that you fail to mention credit utilization holds no memory in your credit history. It is totally fine to use 100% of your available credit (so long as you can pay it all off by the due date). Credit Utilization various month to month and can be easily manipulated. If you are not planning to use your credit score anytime soon than the information is irrelevant. Go ahead and spend all you want to maximize points/cashback. However if you plan to apply for a loan, credit card, home, etc. then thats when you should drop utilization 1-3 months prior to getting your credit pulled. For example, I have like 70% utilization on a credit card with a 0% interest promo right now. I’m just paying the minimum every week and keeping the money I would have used to pay that in a HYSA. If I plan on getting a new card then maybe I’ll pay it off to drop utilization and boost my credit score.
Totally fair points about credit utilization not having memory! Typically I see this happen even with my own credit score where I’ve had higher utilization one month and my score drops a few points, but then the next month I have around a 1% utilization and it goes back up. The only thing I do want to point out with that is that there are newer credit scoring models that have come out that track a “trend” of utilization over the past 24 months. Those scoring models don’t seem to be used as much as others that have “no memory” like you said, but still could become used more in the future. For the first mistake, just to clarify, I said it was just “Having High Credit Utilization” because the fact is that a lot of people don’t know how that works. At the end of the day a 100% utilization will drop your score while a below 10% utilization will have a more positive impact. So my example of maxing out a credit card is to illustrate how a 100% utilization can easily be paid down to a 10% utilization before the statement closing date. I could go on and on about many other details, but this video would be way too long if I did! Haha But in general, even though utilization can change from month to month and scores can quickly adjust, I still think it’s best to manage utilization to be under 10% consistently. It all varies person to person though! If you’re truly not applying for any new cards or loans in the near future and your credit score is not a concern, then feel free to have higher utilizations (as long as balances are paid off in full and/or you’re not paying interest depending on APR)! But for most people, I think it’s a good habit to keep utilization lower. Again it’s all about education and awareness though which is the point with the first mistake. I’ll make a more in depth video on credit utilization in the future 👍
@@Daniel_Braun I feel since you have lots of beginners watching, your information is valuable since they don’t truly understand if they’re responsible with cards just yet. However I felt it was important to note since I see so many people be overly dependent on that >30%/10% rule and get scared the second they see their score drop. People should be aware that its truly okay and it can come back up next month. Thank you for the thoughtful response and adding on to the conversation :)
@@davidwilliam9451 that’s true, but if you can qualify for the sofi plus then i think most members are using their savings acc as a checking since it auto withdraws without penalty
My utilization is generally 0%. Well I finally carried a statement balance, bringing my utilization to still under 5%. That STILL brought my score down from 805 down to 795. Wtf!?
You're still totally fine and able to qualify for the best rates and best credit cards with a score like that no matter what! Plus if you pay that down to lower than 5% for your next statement balance then the score should go right back up 👍
The difference between 795 and 805 is purely for ego purposes. Both will qualify you for the exact same rates and cards. Don’t worry about it, if you drop under maybe 750 then maybe care about boosting it back up.
Mistakes:
1 - Having high credit utilization
2 - 0% APR trap
3 - Blindly believing all credit card content
4 - Missing a payment
5 - Not treating a credit card like a debit card
6 - Using the wrong credit cards ( a - low rewards, b - earning cash back instead of points/miles)
7 - Closing an old No Annual Fee credit card
Thanks for pointing out that you shouldn’t necessarily believe the hype and should do your own research to decide what’s best for you.
No problem! Yeah I felt like it had to be said because I always want people to do their own research 👍
Some of these tips seem so basic and yet so many people forget. Well done and thanks as always for sharing the content and your thoughts
Yeah definitely more of a "credit cards for beginners" type of video, so I wanted to try to help with some basics here! Thanks as always!
Love how transparent you are dude…. Started watching your videos at the beginning of the year and I’ve learned a lot
Completely agree with you on Mistake #3. It's similar to investing in Stocks- Don't always believe in the most hyped up Credit Cards out there, but instead base your own decisions on your own spending & what fits well into your travel habits. Love the transparency & great video as always Daniel!
Hi Daniel 👋. Been sending all your videos to my younger sister. She's in her 20s and I don't want her to make the same mistakes i did. Your videos are so helpful.
Thanks so much for sharing my videos with your sister! Glad to hear that the information has been helpful - I really appreciate your support!
Actually, you can tell your brother to upgrade that Wells Fargo college credit card to either an Active Cash or Autograph card. I had the same exact card, and I found out from Wells Fargo that I can actually upgrade it to either of those actually quite good cards. I picked the Autograph card to use as my gas and transit card with 3% cash back(also gives 3% on groceries and travel), but Active Cash giving 2% back on everything is nothing to sneeze at either. My sister did the same thing.
One of the mistakes that I have seen my friends make (especially being an international student in the US) is getting a bunch of store credit cards like Macys, bestbuy etc during thanksgiving., not realising how it hurts them.
Thanks Dan, for providing concise information on credit card usage mistakes. Being transparent is such a fresh and welcome approach to addressing this industry. Kudos to you!
All solid advice, especially #3!! That Amex Gold would do me no good out here in the middle of rural Michigan.
Definitely agree with the hype of credit cards, definitely recommend evaluating your lifestyle first before just randomly getting credit cards.
Absolutely! Always good for each person to evaluate based on their own situation 👍
Mistake #3 was so genuine. I remember watching videos promoting a certain credit card company as “good” that many of us know are not good. Also, all of our viewpoints are based on our opinions, so it is important to definitely research and develop your own opinions to make a decision that’s right for you.
Congrats on the SoFi sponsor!! I love to see big moves like this 🙌🏾 🙌🏾
I make mistake #6 sometimes still 😂😂. I went to Target the other day and charged my purchase to my CFU instead of using my Discover It card with Apple Pay since that’s my current 5% cash back category 😩.
Great video as always Daniel!
That's cool you are looking out for your brother. Great video!
This video is great, concise, easy to understand, and transparent. You're one of the few credit card channels that's not pushy with the selling, elitist, or unnecessarily secretive with only telling 10% of the info before asking you to join their group or mailing list.
Thanks for being the change I want to see in this credit card community.
Thank you so much Lisa! I try to provide as much value as I can! I'm sure I'll eventually have some newsletter or other things people can sign up for, but I'm gonna give all value for free here on my channel 👍
I liked how you mentioned we all need to do our own research. I think that advice applies to more than just credit cards and it’s wise to always do your own research, no matter the subject, but especially credit cards.
Genuine, solid content as always Daniel!
Problem is too many people hear "watch YT videos" when you say "do your own research"
Hey Daniel, thanks for the great videos. I was wondering if you could make a video explaining what it means to freeze your credit and the pros and cons of doing so? Again thanks for the great content!
I totally agree with the first one, which is to keep utilization low. By the time I only had my first Discover It card with 2000 $ credit line, I almost used up every month and never pay early. So the credit score was only 650~. Right soon I paid early just only once, my score went up to 720..
Love to see that! Such a quick way to have a better impact on your score by keeping a low utilization like that!
Good stuff. I am 100% on Number 3 and 5. One of my early problems was treating it as a debit card or checking account. I learned the hard way haha.
I would say for mistake #5, I’d re-word it to say don’t use your credit card as an extension of your income. I’m someone who uses my credit card for everything and pay it off every week and it’s got me a 750 fico so far. Either way awesome video!
If I pay 100% of my balance before the statement close date does that still count as a positive payment for my payment history?
Very useful video. Thanks Daniel!
Hi, Daniel! Hope you’re doing great! Thanks for this video. 😃👍🏼
Hi there! I'm doing amazing and hope you are too - thanks for watching!
Thanks for your video(s) been watching all afternoon. I am torn on one concept…paying in full versus having a low utilization amount reported but then paying before the due date. Don’t recommend doing both?
super great video! especially about the credit card influencers misleading folks. i trust you (most of the time (and after i do my own research))
Excellent video very informative thank you.
Thanks so much Kinnie! Glad to hear you liked it!
Having more than 1 or 2 credit cards is what killed me. I had a 780 score and maintained it for almost 5 years, I got cocky and opened up a total of 10 credit cards. Now I'm in trouble. I maxed out 5 of them without even realizing it, my score right now is 580. It dropped to that in just a couple months.
Opening that many cards that quickly and maxing them out will definitely drop your score - I would pay work to pay those off immediately and then stop using credit cards because the debt and interest is not worth it!
@@Daniel_Braun That's exactly what I'm doing. Thank you for the reply.
Great info!! Is it possible to create a video that goes more in-depth on the different strategies to keep old credit cards open? I’ve heard things like automating small Amazon gift card purchases to keep old credit cards active without the actual work. I think this would be a great video!!
crazy to think that not to long ago u were at 2k subs. i called it!!! u were gonna blow up lol!
I know I can't believe how fast time flies from when I was around 2K subs! Thank you for the encouragement to get me to where the channel is today - I can't wait to keep growing!
You just earned a new sub bro
Thank you so much for subscribing Coleman!
Really great video! You are super informative! Thanks 🙏
8)not learning about finances since early age
😊
I 100% agree with that!
Great video. 👍🏾
Thanks so much, I appreciate that!
Great video 📹 👍
Thank you!
@@Daniel_Braun you're welcome
Question. At what point does hard credit checks negatively start to hurt you. Second question when getting first buisness cards are the credit checks seen in the same negative way against you.
Whats the best approach to walk the line on this issue.
Thank you.
Hard inquiries will drop your score by maybe 5-10 points or so in the short term, but the effect quickly wears off over the next few months after opening a next credit card. The hard inquiry then falls off your credit report after 24 months.
And typically business credit card applications will also come with a hard inquiry on your personal credit. It depends on the issuer though. This can also have that same small drop in your score in the short term which quickly recovers - so hard inquiries are nothing to be worried about over the long run 👍
Hi from Brazil. It's a shame that SoFi doesn't accept ITIN to apply for checking/saving/credit cards. MAYBE I'll try when I get my SSN. Maybe not...
Regards
One thing you didn’t discuss for mitigating high utilisation that I’m curious about is charge cards. Is it true that if you have a card without a hard limit (let’s say an Amex with no preset spend limit) that they don’t report utilisation so you can feel free to put lots of charges there and it won’t impact utilisation and in turn your credit score?
I think paying down 95%+ before statement close is the safer bet but was just curious whether or not this was true since I feel I’ve seen conflicting advice
Great informative video!
Love the shirt! May I ask if there is an affiliate link for it?
Ty for the information
Thank you so much for watching James! Glad you liked it 👍
@@Daniel_Braunyw and anytime
Could you talk more about savings accounts and high yield accounts?
I made another video about that right here going over the best bank accounts! ua-cam.com/video/2F_D4f32rnI/v-deo.html
I got a targeted 125,000 Amex Plat offer. Should I take it? I’m a beginner trying to get into the travel hack game. Only have Chase Freedom
I disagree with the first point. Only the most recent utilization is used to calculate your credit score. Prior utilization percentages don't matter so while it can improve credit scores, it does not actually help build credit. Your credit isn't going to get pulled every month and you can simply lower utilization before you expect to apply for a loan or credit card. Not to mention having very low utilization may make it more difficult to get credit limit increases. Giving out higher limits is more risk for the banks and having lower utilization shows them you don't really need it. It isn't as if the credit limit is limiting your spending on the card so the banks aren't missing out on interchange fees. On the contrary if you max out the card halfway through the statement period and stop using the card entirely while paying it off every month, that is half a month of time they weren't making money on interchange fees due to a low credit limit. I am not saying low utilization is wrong, but I have seen too many people obese over it more than they should to the point you can say they are making a mistake in the opposite direction.
The 1-2% utilization is just wild. It appears counterintuitive to have a credit card if the usage is too low. Perhaps for someone who has many credit cards like Danile, he can live with that miniscule utilization but it's a stretch for many.
Daniel I wish you could make some other videos covering personal financing areas like checking and saving accounts, stocks, crypto and stuff. I particularly liked the one about best checking accounts with highest APYs. Thank you for the video though.
They should make a new rule for old cards. Its like you have a VCR and now it's absolute so why world you keep it there better technology. You should be able to close old credit cards without plenty to open new ones or to reduce the amount you have in wallet.
I just recently paid off my student loans and my credit score immediately dropped 70 points haha I am assuming this is because my credit history went from over 7 years to 2 years since my student loan account closed?
Addressing mistake 2, I think there are two cards that are good for everyone(assuming they can use it responsibly): The Capital One Savor One and the Citi Custom Cash. 5% back on any category of choice is just insanely good, and the Capital One Savor One with 0% foreign transaction fees and 3% cash back on both dining and groceries. Basically, if you eat food or travel, and most people do at least one of those, it's solid
I remember doing research for credit cards a while back and I ended up on including these 2 in my future path! The 5% on the custom cash is extremely flexible, and the SavorOne is such a nice card with tons of benefits and the option to pair with the VentureX. Even if you don't get the VentureX it's still a solid card!
So if you have 20,000 credit limit - you charge something for 4,000 during that statement period and you pay off ALL 4,000 before statement end date - you still get considered using 20% of available credit due to the amount - so paying off balance in full doesn’t keep your utilization at 0% given you paid all of it off before close?
Negative. You are getting the statement end date and balance due date confused. In your example, paying off the $4,000 BEFORE the statement end date will result in your issuer reporting that you have a 0% utilization which is also not good. You want to show that you are using your card, albeit responsibly.
Like Daniel was saying, there is a grace period following the statement close date, which is usually another billing cycle that you can find on your issuers credit card statement. I also keep my reporting utilization in the single digits and have a 800+ credit score. It took me awhile for me to understand that concept but once I did it is really easy to understand. Hope this helped!
I have a doubt. If I make the $1,000 spend as your example and then pay it as soon it gets out of the pending status. Will that still impact my credit score negatively?
I have done this...I still do it. As soon as my card is swiped, I pay the pending charge immediately. I have not had a negative impact on my score for doing this.
You’re being overly cautious. Lenders like seeing that you spend. If you let it post to your statement they may increase your credit limit which will help you out. It won’t negatively impact you but you may see more positives coming from letting some money post to your statement balance. However, if you can’t trust yourself with credit cards then it’d be best you continue that practice rather than have a late payment.
@@addictedtoflying5451 Thank you. Will give it a try.
@@ohhail Interesting. Thank you.
@@junboo8730 Also adding to that, utilization holds no memory so if you have high utilization this month and your score drops then simply have it low next month to pick it back up. It’s not that big a deal. Unless of course you plan on using your credit score soon for a loan or another card. So utilization will negatively impact your score but only temporary so don’t worry as you can easily manipulate your credit score. The only real rule of the credit card game is to always pay your balance off in full by the payment due date, in order to never pay a cent of interest.
As someone that doesn’t travel, I’d much prefer the cashback lol
I really missed the years when FICO was not around. Why would you give someone a credit like of $35K if a person can't use it? Many can't pay back $10, 20, 30k in a cycle. Todays credit cards are not true "credit" cards. Anyway, these are very informative points.
What do y’all think about this. I’m thinking about closing my first credit card. It is now 1 year old but I have 2 late payments and there is an annual fee for it. I’m still new to the credit game and this page has helped me improve my credit. My credit score is now in the high 600 and more than likely I will hit 700s before summer is over. I’m scared that if I close it my score will drop drastically. Should I wait to close it when I’m well into the 700s or gone and close it now??
The late payments will stay on your record for a while, regardless if the account is closed or not. Is that card eligible for a downgrade? Perhaps downgrade it to a no-fee card?
@@RandyMichigan I’m not sure if there is a downgrade option but I will definitely ask. It’s a “Credit One” card.
Is having a high credit utilization really such a problem. Once the card is paid off, won't the credit score go back up pretty much right away? Daniel is hinting that it can still hurt credit score for a while, but from other sources I've found it seems the score will revert after 30 days. Be curious if anyone has solid sources on this.
So to clarify, the mistake is "Having High Credit Utilization" and the examples I give are just to point out the high utilization decreases your score and low utilization helps your score. There's plenty of times where I get a slightly higher utilization reported one month that has dropped my score maybe 10-20 points, and then I pay it down to a much lower utilization the next month and it goes right back up. So getting to a low utilization is something that can be quickly corrected on a month to month basis 👍
Should I pay off my credit card early or on time?
Early as in, if I buy something with it, I pay it off same day
You should do whatever works best for you to be able to make sure the cards are paid off in full! I like to wait until the end of the billing cycle while having a low utilization like I mentioned
Way too much emphasis on credit card utilization. I just spend naturally and don't worry about it. If I'm thinking of applying for a new card or a loan, wsure I know I can make additional payments to inflate my score by a few points but 825 vs 820 makes zero substantial difference so... why?
What if I spend a lot but immediately pay it off?? That won’t still show as high utilization would it?
No
Not if you pay it off before your statement close date. Like Daniel was saying, you still want to show some utilization on your card tho so keep that in mind.
Does having 0% utilization negatively impact credit
How to fix is the video I need
Thanks for watching so early after this got uploaded!
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So if you are approved for a $1000 credit limit what you are saying is that you can’t spend more than $30 dollars? Heck even $300 is crap, at that point the banks can keep that crappy plastic to themselves..
Not exactly - so what you can do is you can pay down your balance early. Essentially you could only spend up to $1,000 with that as your credit limit, but you could spend up to that then pay it down, then spend up to it again, and so on. That is what I was pointing out in that example if that makes sense!
If you don't utilize your credit and you use your credit card like a debit, then whats the point of having credit??!?
Every time you bring up the information in Mistake #1 I feel that you fail to mention credit utilization holds no memory in your credit history. It is totally fine to use 100% of your available credit (so long as you can pay it all off by the due date). Credit Utilization various month to month and can be easily manipulated. If you are not planning to use your credit score anytime soon than the information is irrelevant. Go ahead and spend all you want to maximize points/cashback. However if you plan to apply for a loan, credit card, home, etc. then thats when you should drop utilization 1-3 months prior to getting your credit pulled.
For example, I have like 70% utilization on a credit card with a 0% interest promo right now. I’m just paying the minimum every week and keeping the money I would have used to pay that in a HYSA. If I plan on getting a new card then maybe I’ll pay it off to drop utilization and boost my credit score.
Totally fair points about credit utilization not having memory! Typically I see this happen even with my own credit score where I’ve had higher utilization one month and my score drops a few points, but then the next month I have around a 1% utilization and it goes back up. The only thing I do want to point out with that is that there are newer credit scoring models that have come out that track a “trend” of utilization over the past 24 months. Those scoring models don’t seem to be used as much as others that have “no memory” like you said, but still could become used more in the future.
For the first mistake, just to clarify, I said it was just “Having High Credit Utilization” because the fact is that a lot of people don’t know how that works. At the end of the day a 100% utilization will drop your score while a below 10% utilization will have a more positive impact. So my example of maxing out a credit card is to illustrate how a 100% utilization can easily be paid down to a 10% utilization before the statement closing date. I could go on and on about many other details, but this video would be way too long if I did! Haha
But in general, even though utilization can change from month to month and scores can quickly adjust, I still think it’s best to manage utilization to be under 10% consistently. It all varies person to person though! If you’re truly not applying for any new cards or loans in the near future and your credit score is not a concern, then feel free to have higher utilizations (as long as balances are paid off in full and/or you’re not paying interest depending on APR)! But for most people, I think it’s a good habit to keep utilization lower.
Again it’s all about education and awareness though which is the point with the first mistake. I’ll make a more in depth video on credit utilization in the future 👍
And also thanks for such an in-depth comment! I think it’s always good to add details and discuss things that I can’t cover in full with every video 👍
@@Daniel_Braun I feel since you have lots of beginners watching, your information is valuable since they don’t truly understand if they’re responsible with cards just yet. However I felt it was important to note since I see so many people be overly dependent on that >30%/10% rule and get scared the second they see their score drop. People should be aware that its truly okay and it can come back up next month. Thank you for the thoughtful response and adding on to the conversation :)
I lost a friend to one of these😔
Just signed up for my first credit card (Capital One Quicksilver). You’ve gained a sub from me!
SoFi is now at 4.40% APY!!
@@davidwilliam9451 that’s true, but if you can qualify for the sofi plus then i think most members are using their savings acc as a checking since it auto withdraws without penalty
I was supposed to be first!
You're always in the running for it CJ! You did win "Top Commenter" after all in Chad's video lol
@@Daniel_Braunhaha thanks! I’m still claiming first though 👀
Yep
🔥
Appreciate you watching Spencer, thanks man!
👍🏻
Thanks as always for watching and supporting!
My utilization is generally 0%. Well I finally carried a statement balance, bringing my utilization to still under 5%. That STILL brought my score down from 805 down to 795. Wtf!?
You're still totally fine and able to qualify for the best rates and best credit cards with a score like that no matter what! Plus if you pay that down to lower than 5% for your next statement balance then the score should go right back up 👍
The difference between 795 and 805 is purely for ego purposes. Both will qualify you for the exact same rates and cards. Don’t worry about it, if you drop under maybe 750 then maybe care about boosting it back up.
Yo
Yo! Thanks for watching!
👍
First comment! You win 🥇
@@Daniel_Braun thank you! I hope this video helps a lot of people out!
@@sungjeh Me too! Feel free to share it around with anyone that it might be helpful to 👍
Don't get one and avoid ALL 7.
Amazing I also use sofi love them
Heads up you need direct deposit to get the 4.40 % apy
Great to hear that! I really have loved using SoFi as well. And yes, direct deposit is needed for that so thanks for the comment