"SHOW ME THE MONEY" VIEWS on HOW to make MONEY GR

[Bretsky]

On the subject of credit cards, I read somewhere about signing up for those 0% APR for a year type of deals and then when the year is almost up transferring all your balance to another offer for 0% interest. Does anyone do this?

I've heard you can really screw up your credit rating if you do that. They leave the credit card you transferred from open and you end up with a screwed up debt to credit available (is that right?) ratio.

Hmm, but the ratio is based on actual money owed not how many different accounts you have. Right?

I have several clients who have did the credit card at 0% flipping for some time. If you do it right this it should not seriously damage your credit score.

Your credit scores are based on a number of things, a few of which include payments made on time and delinquent payments (by far the most important factor), any current liens or judgements, revolving debt balances, and the number of times your credit is pulled by companies. Having a few unused credit cards should not hurt you much unless you are carrying balances and not making payments on time.

Remember each time you sign up for a no interest rate CC that company has to pull your credit, and if you do that too much, it will damage your credit. If you are doing this with one or two cards (resulting in 1-2 credit checks per year), this won't have a lot of adverse impact from the credit pulls.

But if people are doing this, and then running up these cards and never paying any principal off, this will have a long term bad effect because their debt loads are constantly going the wrong way.

But the #1 factor in building credit is making your payments on time. Every time you make a payment to a CC company, even a minimal payment, if it's on time they report this to the credit bureau and that helps your score. Likewise, if your bill is 2G and you don't have much money and neglect to send in a minimum payment, they will report you being late and that will have a very bad effect on your score.

As a banker, the first details I look at on a credit report (after the scores) are how many late payments people have made in their lifespan. People with perfect credit can usually get approved for much higher payments on a loan than they normally want or can afford.