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New Visitor
sharath20284
Posts: 4
Registered: ‎06-15-2010

Credit card payments and suggestions to improve the score

[ Edited ]

Hello,

 

I need help in improving my score!

 

I got my first credit card in Jan 2009 and trying to build a good credit rating since then. I got a second one in Apr 2010. Both of them have a $1000 limit.  I do not have any late payments, and the general usage is around 70-80% of the limit on the cards. I do not have any mortage/auto loans. I am financially stable with a steady income and zero debt.

 

Though it is been about 18 months, my score is very low (~600) . I do not know what I am doing wrong..

 

Recently, I got lured by a bank in to appying for a "offers" card, and got denied. I got to know that there was a hard check on the score which still lowered the score. I had also requested for a increase in limit on my existing cards and got denied on both.

 

1) There was a problem with my home address  when I got my first card (from BoA). The card was reported stolen/lost twice before I got it in my hands.  I recently otained a report from one of the "free" credit score sites.  I saw that there are 3 checks/statements in the score report regarding the same card. Is this bad for the score? Can I get it fixed with credit bureau as it was error from the bank's end?

2) Is it good to have high balance - 70-80 % on the cards till the due date?

3) I have set up auto payments for the full payment on the due date - Is this bad? Should I pay it off earlier?

 

4) I want to open a Wells Fargo checking/savings account.  I already have c/s accounts with 3 other financial institutions. Can I go ahead, or need to wait for some months? I heard that opening an account is a hard check on the score. Please suggest

 

What else should I do to improve my score?

 

thanks,

Sharath

Regular Contributor
Travis-84
Posts: 187
Registered: ‎05-07-2010

Re: Credit card payments and suggestions to improve the score

1.) I'm not sure what you mean by "3 checks/statements for this card", so I won't answer this question.

 

2.) You generally don't want a high balance.  What is important is what balance is REPORTED.  Lets say your statement ends on the 15th, but your bank reports you balance on the 30th.  You would ideally want it paid off before the 30th, so it reports a zero balance, or at least gets it down to a small balance.  If it is always reporting at 70% utilization, then that is hurting your credit score.  If you are not applying for credit that month, I wouldn't worry about micro managing it, but if you are going to apply for new credit, I would get that at less than 9%.  The biggest thing is knowing when the creditor reports, so you know when to pay it off.  I think an easier solution would be to minimize your credit usage a month or two before any new credit inquires. 

 

3.) You should always pay in full, and auto payments are a good way to make sure you don't forget a payment.  Read my comment on number 2 about the creditors reporting a balance.

 

4.  A checking/savings account shouldn't be a hard pull since you are not applying for credit.  Go ahead and open it now if you want.  Even if they did do a hard check, the sooner you get it done with the sooner it will be off your report.

 

 

1.  I would try to keep the usage down to improve your score, as I said before.  Also, you don't have a well established credit history, which is also hurting your score.  As time goes by this will go up on its own.

 

Where did you get your Fico score from?  Do you know what credit reporting agency they pulled.  A lot of those credit scores use a different algorithm, and your true score could be vastly different from what that website said.

 

Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: Credit card payments and suggestions to improve the score

Hi Sharath,

 

I gave a few suggestions over in Rebuilding Your Credit but I'm sure you'll get some more here.  :smileyhappy:

 

 

From a BK years ago to:
9/09 EX pulled by lender 802
3/10 EQ- 800
4/10 TU -772

You can do the same thing with hard work

Credit Scoring 101
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Frequent Contributor
techgirl
Posts: 371
Registered: ‎12-28-2007

Re: Credit card payments and suggestions to improve the score

Take out a personal loan and then pay it back in 6 months time just the payment on time every month.

 

Basically, FICO scores you on how much debt you get in and how you pay it back. In addition to credit cards, it would be good to have a personal loan if not an autoloan. But, knowing what I know now because of Dave Ramsey, I would pay everything in cash and not worry about my FICO.

05/12: approx 680 across the board
04/08 EQ: 730 TU: 748 EX: 718
03/08: EQ: 713 TU: ? EX: ?
12/07: EQ: 689 TU: 711 EX: 721
Contributor
ottergo4
Posts: 88
Registered: ‎10-28-2008

Re: Credit card payments and suggestions to improve the score

 Sarath;

 

               I opened a Wells Fargo checking acct. in 2008 and it was a definite hard pull. Don't remember which cra though.

New Visitor
sharath20284
Posts: 4
Registered: ‎06-15-2010

Re: Credit card payments and suggestions to improve the score

@Travis - 84 :

 

Thanks for the suggestions.

 

The credit report was from Equifax.

 

I mean by "3 checks/statements for this card" that there have been three consecutive checks (probably a hard pull) on my score for the two lost cards and one card that I received. When I applied for a card from Chase a month back, they denied stating that " too many new credit applications/requests" which I have not done - It is a mistake on BoA that the cards were lost - Can I get it rectified by giving a request to Credit Bureau?

 

Can I get to know from the bank when the balance is REPORTED? Can it be before the payment due date ? Also, is it good to have some revolving payments (say a $100 balance every month , even though I can pay it off in full) and  pay some interest - in order to improve the score ?

 

By card usage, do you mean that I should spend only up to say 30-40% of my limit and pay it off? Is it bad to be reaching the upper limit, even though I pay it off?

 

Sharath

Senior Contributor
Wolf3
Posts: 3,198
Registered: ‎01-24-2010

Re: Credit card payments and suggestions to improve the score

[ Edited ]

 


sharath20284 wrote:

@Travis - 84 :

 

......

Can I get to know from the bank when the balance is REPORTED? Can it be before the payment due date ? Also, is it good to have some revolving payments (say a $100 balance every month , even though I can pay it off in full) and  pay some interest - in order to improve the score ?

NO, This does not help your score at all.   It only costs you money and profits the bank.

 

By card usage, do you mean that I should spend only up to say 30-40% of my limit and pay it off? Is it bad to be reaching the upper limit, even though I pay it off?

It is not bad to charge to upper limit and pay it off (I do it regularly). However, if you manage the accounts, so that the balance reported is a smaller utilization, your score will be higher.  You can do this by spending less or paying some of it off early before the statement closes.  Some recomend doing this all the time,  I only do it when I am planning a significant credit application.  Last months utilization has no effect on this months FICO score.   

 

Sharath


 


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