Unfortunately, I live on credit cards. There is simply no way to afford doctor co-pays, car insurance, dental work, etc. now. I figure our monthly outlay is about $600. I know it's a trap-can't afford even essentials, charge them, pay less than what was charged, charge again, rinse, repeat.
The banks are pretty savvy; No sooner do you make the first payment on a new card then they raise the limit. "OOO, they can afford to pay us $200 a month! Raise it again!" But that new card doesn't have any interest accruing; by the time it does, you're in it deep and that $200 put on it each month now equals maybe $90. Gotcha!
Now, here's the beauty of it: Credit scores are determined by timeliness of payment and debt to credit ratio. So, if you have a credit card with a $26k limit but only use $3k of it and pay, say $200 a month, you look great. If you have that same $26k, use it to its max but only pay bare minimum and sometimes it's a day or two late, your credit score takes a dive.
Nothing about income, nothing about debt to
salary ratio. That'll come later when you get a mortgage and as long as you can afford to pay 30% of what you make, no problem.
I make $15k a year, have $23k in debt and my credit score is, as I was told, "excellent". Why? Because while the cards are in my name, my spouse makes the major salary and I pay each card (3 right now) $200 a pop each month. They don't care that it's not my money paying them; they wouldn't even care if I used card A to pay card B, long as it's done on time.
It's a 3 card monty and I keep plunking down another Jackson....
