Eric Rosenberg had a strong credit score of 720 when he initially joined Credit Sesame in October 2011. He had only recently begun practicing credit card travel hacking, or maximizing reward points for trips. Also, he wanted to improve his credit because he and his wife had just purchased their first condo together that summer and intended to refinance soon.
He desired proactive credit management.
According to 32-year-old personal finance blogger Rosenberg, who also operates the website Personal Profitability, “I wanted another fascinating data point to manage my credit, which is an important component of my personal finances.” “I wanted to know what I was doing well and what I could improve on,” the author said.
Rosenberg’s primary goal was to achieve piece of mind by knowing that his payment history and account information were accurate and up to date rather than to raise his credit score. “Seeing there weren’t any inaccuracies on my report made me delighted,” he says, “since your payment history is a key component of your credit score.”
He was looking for the best mortgage rate.
Due to Rosenberg’s financial background—he had previously worked as a bank manager who approved loans—he was familiar with the right procedures that establish good credit. He always settles his account in full and has never missed a payment.
He had the assurance that his score was as high as it could be when it meant the most after checking it on Credit Sesame. For instance, he knew he could get the best rates when he refinanced his Denver apartment in December 2012 because his credit score and report were excellent.
From a 30-year fixed mortgage with a 4.25% interest rate to a 15-year fixed mortgage with a 2.875% interest rate, Rosenberg refinanced his first mortgage. “Our monthly mortgage payment increased a little, but our interest rate decreased significantly, so we will ultimately save money.”
Eric knew he could shop around once more for the best terms and interest rates when he and his wife made the decision to sell their Denver home and relocate to Portland, Oregon.
He was curious about how to reduce the harm that hard inquiries do to credit scores.
Only having a few credit cards and being an authorized user on one of his father’s cards, Rosenberg initially joined Credit Sesame. He has used up to 15 credit cards simultaneously since he started to become a serious travel hacker.
Rosenberg argues that there aren’t many interest rates you can’t qualify for after you have a high score, like 760 to 780. “If your credit score is higher than that, it’s only boosting your ego,” the person said.
But, if your credit score is hovering between two categories, such as between good and exceptional or fair and good, you should take every step possible to move up to the higher category. Rosenberg argues that if your credit score is 755 you shouldn’t apply for a new credit card. So if you open a new card and your score drops to 810 from 815, it doesn’t actually accomplish anything.
He wanted to monitor minute changes.
When Rosenberg applied for a new credit card, he found that his credit score would drop three to six points after checking it on Credit Sesame. He was unconcerned by slight decreases brought on by more questions because his score was already high.
But, he was careful not to take any actions that led to a hard inquiry into his credit when he was preparing to renew his mortgage or purchase a new property. Throughout the preceding six months, Rosenberg engaged in what he dubbed a “credit fast” in which he abstained from applying for any new credit cards.
For people who belong to the credit elite, Rosenberg advises doing the following to maintain a perfect credit score:
Every year, check your credit cards. If you enjoy using credit cards for trips, Rosenberg advises auditing your cards once a year. Rosenberg claims that if a credit card has no annual charge, he frequently keeps it open to speed up the aging of his credit and occasionally uses it to keep it active.
Rosenberg assesses whether to keep each annual fee-related card separately. For instance, it can be worthwhile to keep the card if it earns benefits that are more valuable than the annual fee, such as a complimentary hotel room, which can cost between $200 and $300 per night.
If you have excellent credit, you may always get in touch with the credit card issuer and request a fee waiver or extra bonus points to make up for the annual cost.
Your score can suffer if you do close an account. One, when you lose the credit limit on the canceled account, your utilization rate will increase if you have balances on other cards. Two, closing an account may result in a decrease in your average file age, depending on the ages of your other accounts.
To maintain the account’s age without incurring ownership costs, some issuers will let you change it to one with no yearly fee.
Know your boundaries. Learn about your spending patterns, Rosenberg advises. Use credit cards only if you can pay them off in full each and every month and never miss a payment. If you don’t, it’ll wind up costing you a lot. Free flights and cash back are obviously appealing, but according to Rosenberg, it would be preferable to forgo the credit cards and pay for the vacation yourself rather than rack up thousands of dollars in interest fees.
Keep using best practices. Nothing you do should damage your credit. Continue to make on-time, full payments on your balance, routinely check your credit reports for inaccuracies (you are entitled to a free credit report from each of the three main credit reporting bureaus once a year), and keep an eye on your credit. Credit Sesame offers free credit monitoring.
When Rosenberg first joined Credit Sesame, he acknowledged that he had a slight obsession with checking his credit score constantly. He now checks his score once every two months or when he gets notifications that it has changed.
Rosenberg and his wife recently relocated to Southern California, where they intend to purchase a home this summer. He will actively monitor his credit because of the changes in his situation—he entered the full-time workforce last year, and Southern California’s property market is more expensive than that of the other areas he has lived in.
In addition to the rise in the average age of his accounts, Rosenberg’s outstanding credit habits—always paying balances on time and in full, checking his report for inaccuracies, and going on “credit fasts” before significant credit applications—have raised his score to 820.
Credit, like everything else, functions like a tool, according to Rosenberg. “Maintain a high credit score and take advantage of it.”