I have done some online research but I’m looking to get advice from the members here as the membership here has been very helpful in the past on all manner of subjects.

Right now my credit rating is “good”. I don’t have any negative items that are affecting my score, my score comes from a lack of credit history. I have never been a believer in using credit cards and so while I was married for 20 years I never had one in my name. My wife did and I was an authorized user, but none were mine. In those 20 years we had two car loans, one paid off in 2002, the other 2012. We also had a home loan. We were never late on a payment and paid the few cards we had off monthly.

I got divorced about two years ago and found out that my lack of credit hurt my credit score. So I opened a credit card and have been using it, then paying the balance off monthly, always on time. After 6 months (on the advice of my bank) I opened another credit card. That card has some great rewards so I use it occasionally as well and also pay the balance off monthly.

This has raised my score slightly, but my score has stayed pretty stagnant for the last year or so and at this rate I can’t see getting it to the next level. I would like to buy a house within the next 6 months and would like to know if anyone has any advice on raising my score. Or do I just buy the house, pay on it for a few years and then refinance when those payments raise my score?

I only have 5800 in available credit between the two cards which doesn’t seem like too much to negatively affect my rating. I am not ready to buy a car yet so I don’t want to do that, but should I be looking at getting some other line of credit where I make monthly payments? A lot of online gun companies are offering financing on guns now, and I looked at the offers and you pay a lot more than the gun is worth in the end, but I’d be willing to pay the interest if it would help my credit. That seems like a bad idea but if it would work I’m willing to do that.

Here's a short article on what makes up a credit score, which will tell you what you have to do.

It's not gonna happen in 6 months, though.

https://www.experian.com/blogs...-your-credit-scores/

I can't help with the credit score but do some reading on Dave Ramsey's website. There are resources there for home loans. I might not have the correct term but I think it's alternative lending or something like that. It's for individuals with non-standard incomes or minimal credit history. Possibly Churchill mortgage??

Your realtor might also have some suggestions. I used an ELP (endorsed local provider) realtor from Ramsey's site and have no regrets. I'll use her the next time I need a realtor without even shopping around.

Dan

Have you met with a loan person yet?

Member of a credit union?

If you have a consistent/reliable income, and nothing negative, I believe you will be pleasantly surprised once you check with a few options.

Available credit is a *good* thing.

The higher, the better. If you have $200,000 in available credit, buying a $1000 tv on a credit card will have zero impact on your score. If you did the same thing with just $5800 in available credit, you'd see your score change 10-20 points month-to-month due to over utilization.

Also, paying your card off every month doesn't mean that your balance being reported is zero. Your bank reports your balance to the credit reporting agency once a month on a specific day, and that's the number used to calculate your utilization ratio. Even if you pay your card off when it's due, your utilization at any specific moment may be higher.

So, if you routinely carry $1000 in monthly expenses on your credit card, you are being reported as using close to 20% of your available credit (this is bad). You want your utilization to be between 1-5%.

I've carefully groomed my credit and my wife's credit into the 830+ area from the low 600's. I use Credit Karma to see periodic snapshot of my credit report and to model my scores and changes I may make.

Additional thought:

You won't be able to increase your available credit by opening more cards in the next 6 months. You'll get a score penalty for opening too many new accounts in a rolling 12 month period.

Instead, call your bank and ask if they can raise your limits without doing a hard credit pull. Not doing a pull is important as you get a penalty for doing too many hard inquiries in a short period of time. My credit cards frequently raise their limits for me simply by asking.

^^^ What Aeteocles said ^^^

If you are looking to buy a house in the next six months, don't open any new cards. However, go to your two existing cards and ask if they will increase your credit limit. This will increase the ratio between available credit and used credit. Careful, though, because it will create an inquiry in the short run.

Aeteocles is spot on about credit utilization percentage. It is questionable, but you may be able to raise your score in six months by opening a new account, as the initial bump down may only last a couple of months, and then you’ll have more available credit. If you don’t want to risk that, you can ask for credit increases on your current cards. This would help by increasing available credit, without the downside of a new account.

One thing you CAN do which could make a big difference, is pay off your accounts frequently, even daily. If you have online access, log on every day (or as often as you can) and pay off the balance. That way, whenever they report, it’s much less likely that you’ll have a “high” balance.

I have several cards, including a business Visa, which is tied to me personally. The day after I turned 60 my credit score dropped over 60 points! I was thinking “age discrimination”! But I just happened to have a high balance on that card (and maybe others) at the time they reported that month. I had been paying them all off weekly or even more frequently, but got busy and was paying less attention, and it made a huge difference.

I had started paying them more often, primarily due to the negative effect of my Amex cards. I love Amex customer service and card benefits, but they have no credit limit, so any balance adds to your balance owed, and there is no offsetting “available credit”.

take out a personal loan or buy a couch on credit, pay the monthly charges for little while and then pay it off
paid off loans helps your credit score, but it is not a quick process
working with my now adult kids, who have notoriously paid cash for everything (vehicles included), they took out a personal loans at the credit union for a thousand dollars/1 year, it is starting to come up slowly

I don’t have any tips.

My credit rating went down 20 points after I paid off the house. Go figure.

The reason stated is because I only carry 2 cards and don’t use them much.

So I went from exceptional to very good because I have no debt…

quote:

So I went from exceptional to very good because I have no debt…

That right there tells you all you need to know about the banking system.

It takes time, history and resources ($$ or making $$)

Sounds like you are on the right path.
If you think you are going to shop for a car why not meet with a lender for getting pre-approved or advice on what it takes to get the house.
In my mind I would think a lender would welcome a future customer.
Good Luck

I will second about seeking a mortgage loan that you do not "touch money", freeze (stop using) and pay off your cards, do not use lines of credit, make sure you have accounting of all cash deposits and personal checks, income outside of W-2/1099 employment.
Basically every dollar in or out needs to be accounted for in underwriting, and if you make deposits or use credit, you may never hear why you are declined, or why you obtained a higher interest rate.


"Mattress money" (what lenders call significant cash on hand) is also a real big red flag with lenders.
It is not so much a question of "illegal activity", but the lenders are concerned if they see such funds and if they are "undocumented" loans from families, friends, or otherwise unaccounted for sums that require a repayment that increases their exposure and risk to default.

Since the market is hot, and people are also hot to refinance, either to get lower rates and/or get cash out of equity to live on during the past two years, lenders are not remiss to simply deny and move along from anyone that has questionable standing.

Someone with some of the things mentioned, may have 850 FICO, and you with a less than stellar standing, but you are "clean" financially, and Becky will call you with approval.

(broad brush applied)

Why do you even care. We’ve all been snowed on how important your credit score is. All it really is is a score of how much a slave to the bank you are.

Is your score important? Of course a bad score can hurt you but the reality is if you use ONE credit card responsibly your entire life you will be able to borrow more money at the best rates than you should ever actually use.

Credit score is one of the biggest scams ever laid on the American people. This is coming from someone with a kid 800 credit rating. 99% of the population would be proud and maybe even brag about that credit score but the reality is that I have a score that high largely because I have bought way too much crap using credit cards and loans.

I’ve noticed if my card has a balance on the monthly statement my score drops 25 points immediately. It goes back up once paid but I hate seeing the drop. I pay off my balance including any pending charges before the statement date. I only use the card for the rewards.

I would absolutely Not take on debt and pay interest to increase my score.

Pay your card off BEFORE the due date or make payments 2x month to lower utilization percentage.

quote:

Originally posted by 1s1k:
Credit score is one of the biggest scams ever laid on the American people.

Agreed. Despite the fact that I have no mortgage, no car payments, haven't carried a CC balance in decades, pay on time, and have substantial retirement assets set aside, my score is lower than it was 20 years ago.

My evil deed? I pay several of our large vendor accounts at the office with a CC and pick up some cash back. That is paid in full every single month, but still looks like I have large ongoing balances. I seriously don't care.

I saw something about taking out I-bonds, and borrowing against it.

One acquaintance, when we were young, took out a small loan, worked out the full cost of the loan, then deposited the amount needed to cover the cost in a dedicated account, and had the bank auto draft it.
(It was something that bank did to permit young people to build a credit history.)

I’d raise each card to $10,000. Make sure the cc company will not automatically raise it more. Pore over your report; make sure every single unused line of credit is closed.

That’s it.

quote:

Originally posted by 1s1k:
Why do you even care. We’ve all been snowed on how important your credit score is. All it really is is a score of how much a slave to the bank you are.

Is your score important? Of course a bad score can hurt you but the reality is if you use ONE credit card responsibly your entire life you will be able to borrow more money at the best rates than you should ever actually use.

Credit score is one of the biggest scams ever laid on the American people. This is coming from someone with a kid 800 credit rating. 99% of the population would be proud and maybe even brag about that credit score but the reality is that I have a score that high largely because I have bought way too much crap using credit cards and loans.

Why do you even care? Because like it or not, a higher score can save you money - and not only on your mortgage. Yes, because mortgage companies look into your financial history fairly deeply, you can get a good/great/best rate without a perfect credit score. It may take more work on your part, but it is worth it.

A higher credit score can get you better rates on car loans (should you choose to borrow money for a car). Car loans are pretty dang simple - when was the last time you had to even show a W-2 to get a car loan. They are looking at your credit score and probably your credit usage, as compared to the income you self-report on the application.

Further - I'm not 100% sure, but I believe some insurance companies will rate you based on your credit score. Is it right? That's debatable - but it happens nonetheless.

So yes, credit scores SHOULD NOT MATTER AS MUCH AS THEY DO, but they DO matter.