topic Re: Improving credit score in Understanding FICO® Scoring

Improving credit score

kvangor27 — Sun, 28 Oct 2012 17:51:30 GMT

Hi, I'll be applying for an auto loan within the next few months but I need to improve my credit score. I have a $3500 personal loan that I can pay off. Or, should I pay off $3500 in credit card debt instead so that my available credit increases? I wasn't sure which one would potentially help the most. Unfortunately I can't do both :( Thank you, Kevin

Re: Improving credit score

brother7 — Sun, 28 Oct 2012 19:19:20 GMT

To maximize your credit score, I believe a low % utilization on revolving accounts is more important than a low % remaining balance on installment loans.

My recommendation would be to pay down all revolving accounts except one. For the one you allow to report a non-zero balance, be sure the utilization is <10%, ideally 1-2%.

If you have money left over, pay down the installment loan such that at least 35% of the original principal is paid off, ie for a $1000 loan, pay off at least $350, leaving $650 or less remaining balance.

Hope that helps.

Re: Improving credit score

kvangor27 — Sun, 28 Oct 2012 20:07:38 GMT

Thank you very much, that definitely helps :)

Re: Improving credit score

bettercreditguy1 — Mon, 29 Oct 2012 00:16:15 GMT

Definitely, pay off the credit cards first, starting with the highest interest acount. Then keep paying on the next card until it is paid. Then if you want, pay towards your installment loan or "bank" some of your saved payment money for a rainy day fund. Good luck.

Re: Improving credit score

kvangor27 — Mon, 29 Oct 2012 11:59:27 GMT

Thanks again for all the help! One last question. What is the preferred/recommended credit score/monitoring program out there? I've been trying to figure out which is the best between the Experian product and MyFico.com. Any recommendations would be great. Thank you, Kevin

Re: Improving credit score

Shogun — Mon, 29 Oct 2012 16:30:54 GMT

That's a good question, albeit a very complicated one. I will try to do my best to explain my take on this matter. First off, the scores you get from myFICO are FICO scores. They have one for EQ and for TU. They don't have one for EX. A couple of years ago EX stopped making their FICO scores available to the public, and yes, that even includes the scores they sell on their own website. The EX score you get from any site will be a FAKO and could have no correlation to your actual FICO score. The only way to get your EX score is through a lender pull or if you belong to a certain CU in Pennsylvania. My suggestion to you, don't buy the product from their site. You can get a free EX FAKO score from www.creditsesame.com. Hope this clears it up for you!

Re: Improving credit score

kvangor27 — Mon, 29 Oct 2012 16:39:32 GMT

Thank you!! What if I'm going to be applying for a car loan through Ford Credit or another place. I want to get my FICO score and also do some analysis on how paying off certain credit cards will improve my score. I want to get the lowest rate possible but that will only happen if I pay a few of my credit cards off. Thank you, Kevin

Re: Improving credit score

Shogun — Mon, 29 Oct 2012 17:07:11 GMT

Pay down the util on those credit cards, that will give you the most bang for your buck at this time. Get your util to 9% or lower for the most bump.