Jaguars In London: Step by Step
Introduction: A Football Game Taught Me How to Travel for Pennies
Part 1: Getting There
Part 2: 5-Star Stays for Free
Part 3: “But Can I Do It?”
Part 4: Game-Planning
Part 5: Pulling the Trigger
Too Good To Be True?
At this point, I’d found a way to reduce the cost of roundtrip airfare from Jacksonville to London for the NFL International Series from $1,077 to just $197.60 and then discovered how to stay at a 5-star hotel that cost $700+ per night for free, but it seemed simply too good to be true.
Even if – in theory – this were all possible, I wasn’t comfortable at all with the prospect of signing up for 3 or 4 different credit cards in short succession to make it happen. What would that do to my credit score? I was in the middle of finishing a refinancing on my condo and didn’t want to screw anything up.
I also wasn’t comfortable with having so many different minimum spend requirements to meet. I didn’t think I could reach the necessary threshold on so many cards at once, even given a three month window, without changing my spending habits to make more purchases than usual.
Plus, there were plenty of questions in my mind as to whether I would even be approved; if not, this was all a rather moot point. I had to find answers to these questions before moving forward.
My biggest concern was the impact on my credit this type of sign-up spree would cause. I knew that there were three major credit bureaus in the US: Experian, TransUnion and Equifax.
I found that each of these credit bureaus calculate their scores using the same algorithm, but based on the information that particular credit agency has about your credit history. That’s why scores can be somewhat different from each of the bureaus: they calculate scores the same way, but some may have more or less complete and more or less recent information about your credit history than others.
On the FICO scale, a credit score of 700 or above is considered good; above 720 would be very good. The average score is roughly 692, and the median is 723.
You’re entitled by law to view your credit scores as calculated by each of the three major bureaus for free once per year. AnnualCreditReport.com is where you want to go for this, as that is the official site where you can receive truly free reports from each bureau annually. You do not need to sign up for a credit monitoring tool or pay anything for these reports.
I had already used my free credit reports for the year as part of the home refinance I was currently completing, so I wanted to know if there were some other tool I could use to track my credit status and get an idea how my score would be impacted if I moved forward with some or all of the cards I’d found.
I found CreditSesame.com and CreditKarma.com, both of which are great tracking tools that can help you keep track of your credit score throughout the year. The scores calculated by each of these sites are estimates and are not your official score, but CreditSesame is operated with Experian data and CreditKarma with TransUnion data, so their estimates are based on the same information used by the bureaus in calculating your official FICO score.
Anatomy of a Credit Score
In my research, I found that FICO scores are based on five key components, each of which are more or less important as shown by the weighting they’re given in formulating your score.
The most important of these is Payment History. Quite simply, do you have a strong track record of paying your bills when they are due? It’s no wonder this makes up a full 35% of your credit score. What came next surprised me, though. Credit Utilization comprises 30% of a credit score, nearly as much as payment history! This is the percentage of available credit that you use on a regular basis. Using the tools at CreditSesame.com and CreditKarma.com, I quickly saw that my utilization was fairly high and that this was hurting my credit score.
I had only a few credit cards with relatively low limits and they hadn’t kept up with my spending as it had grown over the years. Because of this, my credit utilization was often well over 50%. For example, if my total available credit at which I’d “max out” all of my cards was $6,000, my normal monthly balance across my cards would be around $3,000 at 50% utilization.
There’s no solid rule as to the “perfect” credit utilization ratio, but experts tend to agree that somewhere between 10-40% is the sweet spot. It seemed to me that in an ideal world, my credit utilization should be at around 15%, not 50%. There are two ways to improve this: either spend dramatically less or increase the amount of available credit.
I wasn’t spending an outrageous amount on my cards commensurate to my income, so it seemed perfectly reasonable to me that increasing my available credit was the better path, and led me to a strange conclusion: applying for a few credit cards seemed likely to improve my credit score.
After all, the number of “inquiries” on my account, or the number of new accounts I’d opened, represented only 10% of my credit score. My length of credit history already was relatively short, as I didn’t get my first credit card until only a few years prior. This 25%, already not particularly working in my favor, and so taking a very small ding on these fronts in order to improve the more heavily weighted credit utilization line seemed like a sensible tradeoff.
In addition, I learned that being denied on a credit card application doesn’t negatively impact your credit score! Credit card applications only register as an event on your account if you are approved. My biggest fear previously had been being denied and harming my credit unnecessarily, so this was a relief. Knowing that denial was risk-free and that approval was likely to balance out in my favor, I felt much more comfortable moving forward.
Now, it was time to lay out a specific plan to move forward. Knowing what I now knew, I had another thought: maybe I could hatch a plan that would send not just me, but also my brother and parents across the Atlantic as well on an adventure much bigger than simply traveling to a football game.
Check back tomorrow for Part 4!