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Registered: ‎07-14-2009
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Credit Card Usage for high FICO score

I just read through all 15 pages of TheNewWorldMan's sticky post about credit cards, thanks for the great info everyone. My Equifax score was in the 730s last year but I believe it has now dropped below 700 and I was declined for a particular mortgage I wanted. My goal is to get the score over 800 and my plan mainly involves using credit cards to improve the negatives mentioned on my score report. Some questions:

 

Do credit card companies report to all 3 credit agencies on the same date each month?

 

Is it better to have an American Express or Diner's Club card compared to regular credit cards?

 

Does anyone know how CLs are increased on cards? I opened a new card in November last year and they just increased my limit by $800 without my asking or doing anything. Is it paying off balances regularly without late payments, maintaining a large balance for many months, or using a high percentage of the current limit for 1 month or a certain number of months? I did all of these things at different times so I am not sure which was responsible.

 

Will a higher credit limit even increase my FICO score? If utilization is the thing and not a high credit limit per se, I can just spread out purchases over a variety of cards.

 

How long do hard pulls last on a credit report and is there any way to get around it if one is applying for credit for say a mortgage or a car?


I'd like to keep a few credit cards indefinitely without using them so it contributes to my account history and number of accounts. Will credit card companies close an account not being used or will they contact me first? How often do I need to use a card? Once/year, once every 2 years?

 

 

Lastly, some thoughts about the ideal number of credit cards. Someone had posted this negative on their file:

  1. You have too many credit accounts with balances.
Number of your accounts carrying a balance
8 accountsFICO High Achievers [?] have an average of 3 credit accounts carrying a balance.
  1. Your FICO score considers the number of accounts you have with balances. For credit cards, even if you pay them off in full each month, your credit report may still show a balance on those cards. The total balance on your last statement is generally the amount that is shown on your credit report.

 It states that FICO High Achievers have an average of 3 credit accounts with balances, therefore there is no ideal number but likely a relative number that is ideal depending on the other accounts present. In the post about people with scores in the 830s, there were 2 examples of people who had 1 credit card but they had a very small number of other accounts. I believe that people with lots of other accounts with balances will need lots of credit card accounts to maintain a favorable balance while on someone else's report it will be seen as a negative. For example, see the post below:

 

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&message.id=24029

 

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Registered: ‎04-19-2009
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Re: Credit Card Usage for high FICO score


Goal800 wrote:

I just read through all 15 pages of TheNewWorldMan's sticky post about credit cards, thanks for the great info everyone. My Equifax score was in the 730s last year but I believe it has now dropped below 700 and I was declined for a particular mortgage I wanted. My goal is to get the score over 800 and my plan mainly involves using credit cards to improve the negatives mentioned on my score report.


You have an issue and a wealth of questions. I cannot even begin to address all those questions at this hour, but I will chip away at the issue. First of all: are the scores you reference above FICO scores? It is imperative that you use true FICO scores only when working to improve your credit. FAKO scores are worthless do not relate in a consistently meaningful way to your actual FICO scores. Assuming you are comparing true FICO scores you have recognized a score drop of 30 to 40 points and possibly more. This is significant. There has been some major change in your credit profile that has provoked this change. Have you pulled all three of your credit reports and examined them? You must do this as the devil is in the details. Errors do occur. Barring an error it is likely that your problem is one in the utilization area, but it is virtually impossible for us to provide further aid without you providing many more details of your personal credit picture. If you can do that I (and others here) will attempt to assist you in figuring out what has gone wrong and will provide suggestions as to how to get back on track.

 

Regarding FICO scores of 800+. This is not easy to achieve and you (or anyone for that matter) may not be able to reach an 800+ FICO score in a short period of time by any specific action that can be taken. Achieving very high FICO scores requires two things you can not directly influence: 1) TIME. You cannot will your oldest account to be older that it is or your AAoA to be greater than it is. Very high FICO scores require consistent credit performance over a long period of time. This is why you have to focus on the here and now in order to make your current FICO score as high as you possibly can. Once you get to a certain point in your credit development further increases in your FICO score can and will be achieve only through the passage of time. 2) SCORING BUCKET. This is an arcane, but important issue. Which scoring bucket you fall into will have an impact on the maximum achievable FICO score you can attain. There is very little you can directly do to influence your scoring bucket and attempting to micromanage your scoring bucket is a complete exercise in futility. I know you are going to ask so I will attempt a preemptive answer - very little specific information is publicly available on scoring buckets beyond the fact that they exist. You will not get further specifics unless you gain employment with Fair Isaac.

Established Contributor
Posts: 640
Registered: ‎09-02-2008
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Re: Credit Card Usage for high FICO score

The short answer for what you can do immediately to increase your credit score is to pay your credit card balances off (or at least to below 1% utilization). Also, do not let more than one (maybe 2) cards report a balance. Utilization plays heavily on your fico score, both individual card utilization and overall utilization.

 

The second most important thing is age--as the other poster mentioned this you cannot control (other than to avoid applying for new credit).

 

If you supply more information we can help more. For example: How many cards do you have and what are their limits and balances. What is you AAoA and oldest account age? Do you have any lates on your reports etc.

 

Good luck, 800 is possible, but it will take time and work to get there.

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Re: Credit Card Usage for high FICO score


cobaltnv wrote:

The short answer for what you can do immediately to increase your credit score is to pay your credit card balances off (or at least to below 1% utilization). Also, do not let more than one (maybe 2) cards report a balance. Utilization plays heavily on your fico score, both individual card utilization and overall utilization.

 

The second most important thing is age--as the other poster mentioned this you cannot control (other than to avoid applying for new credit).

 

If you supply more information we can help more. For example: How many cards do you have and what are their limits and balances. What is you AAoA and oldest account age? Do you have any lates on your reports etc.

 

Good luck, 800 is possible, but it will take time and work to get there.


That would be 1% to 9% total utilization for optimal FICO scoring. (Which may not be possible for many to achieve.) There is nothing to be gained by utilizing <= 8%. Also, remember FICO models round all fractions up, so 9.1% = 10%. We can't really advise the OP further regarding utilization optimization until we have further information.

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Re: Credit Card Usage for high FICO score


creditwherecreditisdue wrote:

cobaltnv wrote:

The short answer for what you can do immediately to increase your credit score is to pay your credit card balances off (or at least to below 1% utilization). Also, do not let more than one (maybe 2) cards report a balance. Utilization plays heavily on your fico score, both individual card utilization and overall utilization.

 

The second most important thing is age--as the other poster mentioned this you cannot control (other than to avoid applying for new credit).

 

If you supply more information we can help more. For example: How many cards do you have and what are their limits and balances. What is you AAoA and oldest account age? Do you have any lates on your reports etc.

 

Good luck, 800 is possible, but it will take time and work to get there.


That would be 1% to 9% total utilization for optimal FICO scoring. (Which may not be possible for many to achieve.) There is nothing to be gained by utilizing <= 8%. Also, remember FICO models round all fractions up, so 9.1% = 10%. We can't really advise the OP further regarding utilization optimization until we have further information.


I respectfully disagree with creditwherecreditisdue.  I have found that my optimal score is obtained when I am below 1% utilization not the 1-9% often discussed. Admittedly the difference in score from <1% to 3% utilization is less than 10 pts. Depending on the OP's bucket etc the absolute optimum utilization/# cards reporting is a bit of a guess. Certainly below 9% with less than 1/2 of accounts reporting a balance. As I stated, I get my highest FICO score with less than 1% utilization and one or two cards reporting.
The OP wanted to know how they could get to a FICO of 800. In the absence of further information (and patience on the OP's part to increase AAoA) paying down/off cc balances is the fastest way to improve a score. 

 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Re: Credit Card Usage for high FICO score

This advice runs contrary to all accumulated FICO wisdom and experience other that yours.

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Registered: ‎01-20-2009
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Re: Credit Card Usage for high FICO score

You can easily manipulate your AAoA, utilization and fico scores by becoming an AU on as many old, clean, little utilized, high credit limit cards, as possible. Preferrably from friends and/or family. Buying aged tradelines is unethical and ridiculously expensive. Otherwise, settle in for the long haul, pay down all your balances, establish a relationship with Amex now so you can take advantage of their "member since" backdating later.

Or get an FHA mortgage?

For a conventional mortgage, the mid score generally needs to only be a 740. Having 800 plus scores isn't going to get you a better rate.

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Re: Credit Card Usage for high FICO score


creditwherecreditisdue wrote:

Achieving very high FICO scores requires two things you can not directly influence: 1) TIME. You cannot will your oldest account to be older that it is or your AAoA to be greater than it is.

 


I raised my spouses AAoA effectively by adding her as AU to four of my 20 year old amex cards. I actually only have one 20 year old amex card. I opened five more in a 9 month period of time and they backdated the opening dates for me. The beauty is I can close them all now and apply for 5 more and they will all still count towards average age. My spouses scores went from the 720's to the 790's. We both PIF before the due date and always have 0% utilization reported. I think I could play around with balances some more and get into the 800's but what's the point?

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Re: Credit Card Usage for high FICO score

I have posted elsewhere here that this account aging is a FICO scam perpetrated by AMEX and a great way to "game" the FICO system. In your case you used it in combination with the AU scam, another great way to "game" the system. I fully endorse the use of these and any other ways to gain advantage over the FICO scoring models as long as they last. Just don't be too shocked when the CRB's decide any particular method of manipulating the system is out.

Valued Contributor
Posts: 2,708
Registered: ‎10-16-2008
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Re: Credit Card Usage for high FICO score


creditwherecreditisdue wrote:

I have posted elsewhere here that this account aging is a FICO scam perpetrated by AMEX and a great way to "game" the FICO system. In your case you used it in combination with the AU scam, another great way to "game" the system. I fully endorse the use of these and any other ways to gain advantage over the FICO scoring models as long as they last. Just don't be too shocked when the CRB's decide any particular method of manipulating the system is out.


 

 

 

The AU aspect of it may already have lost its effectiveness if it's not an actual AU account IN USE by the AU.

 

What I'm trying to say is that I believe the bogus (no-card-in-the-hands-of) AU accounts are being disregarded to some extent (if not totally) right now.   The "pay for piggybacking" on someone else's credit history did not go unnoticed by the CRBs or the lenders, and measures were taken to remove these artificial histories from being factored into individual scores, IMO.

 

Feel free to chime in if anyone else here has real evidence of this, because I'm basing my opinion solely on input from a handful of folks I know with AU accounts but no accompanying cards or actual usage on the accounts by the AU.

 

 

 

 

 

 

 

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