I knew that applying for too many credit cards could adversely effect on my credit score. However, the concept wasn’t picture perfect until I read Rocket Finance’s story where he said, “we traded our credit score of 748 at it’s highest point in exchange for favor from credit card companies.”
I am not above this pitfall either; however, not all of them were bad trades. Here is some of what I have done:
I believe that’s all I have done as far as selling my credit score. But there are other ways:
I am sure there are other creative ones.
I guess the answer is depends. In case of Rocket Finance, I think it isn’t so bad. After all, he got $5,000 through sign up bonuses and credit card arbitrage — enough to balance his budget. However, it could be bad if you are planning to do something that depends on your credit score — i.e., take out a home mortgage. In general, there are two types of trade that I think are worthwhile:
I mentioned this strategy in 7 Steps Debt Reduction Illustrated, where I said it make sense if you could transfer balances from high interest credit cards to credit cards that offer no-fee 0% APR transfer to save you money.
I am also a big fan of getting money back by using reward card, as mentioned in 40+ Alternative Income Ideas and Resources. There is nothing wrong with using credit cards if you pay off the balances in full each month.
When it comes to credit cards, I believe the key is to pay them off in full each month so that you don’t have to pay any fee. If you can manage this, then credit cards are great for collecting cash back rewards and other bonuses. They are also safer than cash and debit cards when you travel. And lastly, they could act as your emergency cash reserve if needed.
|700 - 750||Good|
|640 - 700||Average|
|580 - 640||Poor|