quote:

Originally posted by JimmyRayBob:
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.

You're right, insurance companies will rate you partially based on your credit score. That includes all types of insurance, life, homeowners, car and so on.

Got that from our insurance agent when we insured our present house and heard it again from our car insurance company.

It's their general feeling that the higher your credit rating, the more responsible a person you are and that leads to fewer accidents, not burning your house down and so on.

quote:

Originally posted by Woodman:
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.

Why close unused credit lines? Assuming you don't have a ridiculous number of credit lines open, having some unused credit lines improves your credit mix and in the case of revolving credit, increases your max available credit which improves your day to day utilization percentage.

Thank you for the advice so far!

I care because while I already know it’s a scam of sorts (based on having a mediocre score even though I have no debt at all right now) it does matter to lenders and I dig saving money, especially on interest payments.

I have contacted both card companies and both immediately increased my limit on the two cards. As of this moment those two cards are the only lines of credit I have open.

Also I should have clarified that I didn’t actually think I could raise my score too much in the next 6 months. I would love it if I could but truly I’m looking at the long game here. I can refinance in a couple years if that makes sense. Also I plan on buying a new car in about 18 months that I might need to take a loan out on, so I would like as good a rate as I can get on that.

And thanks for the tips on paying off my credit cards more frequently. I’ll start logging in daily. The one I have is a bank issued so payments are reflected instantly so that’s nice. I also rarely put more than maybe a couple hundred a day on any given card. Unless I buy a gun of course, which I probably do too much of

There is reasonably good online advice out there. But common sense should guide you most of the way in the first place.

The exact method of deriving a credit score is not something that TransUnion will tell you, however. So there is some guesswork and speculation in all of that advice.

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.

This. I read recently that a lot of lenders don’t even use FICO scores anymore. With all the data available, many have developed their own creditworthiness scores.

quote:

Originally posted by Woodman:
...make sure every single unused line of credit is closed.

Don't do this. One of the factors in your FICO score is the age of your credit. Closing old accounts lowers the average age of your available credit and lowers your FICO score.

I’m a mortgage underwriter. We do a lot of portfolio loans based on LTV and your income assets. The bank is conservative so we’re talking 65% loan to value. Not 80% so a bigger down payment helps. Still fully documented but not necessarily based on FICO alone.

I’m much more concerned about somebody with bad credit than no or little credit. Because bad credit means your slow to pay, have let your bills go to collections without paying attention to it etc. You have to live somewhere and no trade lines doesn’t mean your not paying your cell phone bills and car insurance and power bill on time. Unless they send you to collections which men’s your not moshing. I see people on occasion who have never had a trade line. Ever. That really boggles my mind. I know Dave Ramsey says let your fico go away. And pay cash. But in the real world it’s difficult to just not feasible. Having a credit card you use 1-5x a year just to keep it alive is fine. But no trade lines for a grown adult makes me wonder what’s going on as well. And yes. I can do “manual underwriting”. It’s a serious PITA. I’m gonna ask you for 12 months of utility bills and other stuff. That you will really hate obtaining. The FICO algorithm is a fickle beast. I would see about getting a bigger limit. And also maybe even run a small balance for a few months on purpose. Don’t pay it to $0. Alternatively, I know that my credit card cycles on the 13th. That’s when they report balances to the credit bureaus. I pay it to about $10 the day before then pay it off in full after to avoid interest. so it tricks the system to thinking I only owe $10 agains a multi thousand dollar limit. I also don’t really care about my fico. I pay my bills, I resolve billing disputes ASAP so things don’t ever go to collections and I have a 30 fixed rate in the low 2’s and I don’t need to borrow. And if somebody wants to give me a deal 6 months same as cash on some furniture and they decline me because my score went away then F’em I’ll pay cash or not buy.

quote:

Originally posted by CoolRich59:

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.

This. I read recently that a lot of lenders don’t even use FICO scores anymore. With all the data available, many have developed their own creditworthiness scores.

There are alternative systems coming online, but they will still be using some of the same data as FICO. They will just be using more than simply loans, CCs, etc. I.E., they will be less bank oriented. They will also include stuff like utilities. So it's still useful to do some things mentioned in this thread because it should also affect these new methods of scoring someone's credit worthiness.

I have a great credit score. Instead of trying to actively game my FICO score, I've just lived responsibly. I always pay my bills on time and don't borrow more than I can repay. Consequently, my FICO has continually climbed over 800. After buying a couple of houses and opening a tire CC for $100 off, it dropped to 790. Big deal. No lender cares unless it drops below something like 760 or so.

I'm not getting in a pissing contest over credit. You can assume as you wish. I closely studied minute changes in mine for years until about two years ago.

OP said he opened two new accounts; he's slightly dinged for "new accounts within the last two years". The assumption is that he had no other lines of credit, since he just opened the two. His credit utilization will always be low, but available credit is also low, so bump up the lines of credit.

Revolving department store accounts, I'd close those. Once BS accounts are closed, the underwriters on his two open CCs may be more inclined to raise their limits.

Sorry, OP, but if all you have is $5,800 between the two, I do not see a whole lot of trust. Paring down a bunch of unused lines of credit to increase lines on two cards seems like a good idea.

Having a long credit history is more than having a single credit card for long time.

Your credit score is really a debt score. Take on debt regularly, pay it off, and it will go up.

This message has been edited. Last edited by: SIG4EVA,

SoFi does loans that use a lot of that "other" data. In particular, they use data about where you went to school, highest level of education, companies that you have worked for, and professional licenses to determine credit worthiness. The argument is those other life factors may have a bigger impact on predicting your tendency to prioritize paying your bills in full vs the fact that you've had an unused Discount Tire credit card for the past 10 years. I'm sure that data and tech will eventually spill over to other banks, if it hasn't already.

3 simple-steps:
- Pay your balance completely, don't carry a monthly balance
- Don't utilize more than 30% of your available credit.
- You want old age cards, the longer you've had a line of credit open, the better. Don't close any cards if you don't have to.

Not unusual for people to have 3-5 cards, 2 of them are active, the others are merely there to expand their credit line, along with a loan of some sort and/or home mortgage.

It's not a quick exercise to raise your credit score if you don't have much credit history.

I have a FICO Score (8) of 850 out of 850 and I've had it for at least a couple of years.

One of the main factors is the oldest open credit account that you have and you can't do much about that if you've open yours only recently.

The second factor is credit utilization which is how much of your available credit is used. The lower the better. The two ways you can lower your utilization. One: increase your available credit limit and the number of your credit card accounts. Each increase and additional account will ding your score temporarily and will also depend on your ability to pay which is tied to your income. Two: pay down your debt.

To prevent credit accounts from being closed for inactivity, make sure each account is used regularly for some small amount and paid off each month. Otherwise, when accounts are closed, the available credit goes down and credit utilization goes up.

Another factor is to not have any dings for non-payments or late payments.

More available credit (less utilization) will raise your score. I have an 830 credit score and have $300k+ available credit with almost zero % utilization. Your limited available credit (causing high utilization) is what is hurting you.

My credit score fell 50 points when I sold my house in Alaska and moved to Can-eh-duh for 2 years. The other thing that hurt was I swapped both my AMEX and Visa cards for AMEX and Visa cards with zero international transaction fees. (i.e. they didn't like 2 closed accounts and 2 new accounts close together). They completely ignored that my salary was higher than ever thanks to expat pay & perks, 401k was maxed out, 15 years of home equity was sitting in a rainy day fund, I paid everything in full every month, etc. I was the very definition of financial prudence, but that isn't what them bastards are looking for.

Obtaining a mortgage when I moved back to the States got back approx half of my old credit rating, and the next step in getting back to previous score was focusing on keeping credit utilization below 5% by paying credit cards 2x per month (i.e. 1x month wasn't good enough and credit utilization crept up).

I refinanced my mortgage last year and my credit score went down 20 points because of it. In 4 years, I had paid off 9 years of a 30 year mortgage but decided to take advantage of lower interest rates by refinancing to a 15 year mortgage. They only look at original loan amount and how much you've paid down (not much in the first year) instead of looking at home equity.

It's really annoying being penalized for being financially prudent.

quote:

Originally posted by LBTRS:
More available credit (less utilization) will raise your score. I have an 830 credit score and have $300k+ available credit with almost zero % utilization. Your limited available credit (causing high utilization) is what is hurting you.

I'm not quite 830, but I've been playing with a credit simulator, where you can simulate different scenarios to see how it will impact your score, and it shows that even if I raise my limit to a million dollars, it will have zero impact on my score. I can't seem to play with the numbers in a way that will raise the score any more.

I have noticed that if I make a small payment to my credit card bills (i.e. the minimum) then pay the balance of the bill in a separate payment in the same month my credit score jumped 15-20 points.

It doesn't jump each time I do this, but for full disclosure my credit score is comfortably in the 800s.

Direct questions-

What type of bank have you spoken with? Wells Fargo-ish? Small community bank? Credit Union?

What rate have they ballparked you on? Did they tell you what you were lacking?

In 6 months you probably won’t see a huge jump, as has been said. But-an example:

In 2019 I bought a house with my current wife, no money down. My credit took a massive hit during my divorce in 2013-2016 timeframe.

I was able to build it back up first with a credit card through my credit union (paid off every week), then a car loan, then a mortgage. My credit union gives flat rates across the board, if you qualify you get the rate.

We started at 4.75% in 2019, refinanced at 2.25% a few months ago with a broker. If I can do that, anyone with a job can.

I would not deal with a large bank. Your goal is increasing your credit score. I would not make getting a mortgage dependent on your credit score. I would consider that mortgage as a step towards increasing your credit score. Money is cheap now.

quote:

Originally posted by JimmyRayBob:
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.

Additionally, credit score is a factor in some job hiring decisions in certain fields.

quote:

Originally posted by tatortodd:
My credit score fell 50 points when I sold my house in Alaska and moved to Can-eh-duh for 2 years.
...
I refinanced my mortgage last year and my credit score went down 20 points because of it.

Selling my house and buying a new one last year dropped my score by nearly 100 points (high 830s to low 740s). Over the past year, it has crept back up to the low 800s.

quote:

Originally posted by tatortodd:
They completely ignored that my salary was higher than ever

How does salary, or net worth for that matter, factor into credit score? I don't believe it does.