Credit Cards

[Amie]

I'm trying to clean up our credit and raise our FCIO score.  We have 1 credit card with a $2000 and two others with $1000.  All are about 24% - 50% used.  I heard that because they are low credit lines this is hurting us.  Does anyone know?  Should I close all, but one?

Also, I plan to pay off an auto loan in April and heard this will lower the score.  I don't know what to do.  We have low FCIO scores and I thought by paying off a loan would help.  Are we better off paying a new car?  Doesn't make sense, but I don't want to score to go down.

Thanks

[sunrise]

Are you paying off the car early?  Or is the last payment in April? 

[marty56]

Dont close the cards, lower your util to < 10% on them.  Think 5% of 3k CL is better then 50% 20k CL.

This will improve your FICO score. 

The PIF car loan with a good payment record will be worth more to help you get a new car loan.  I dont know about the affect on a PIF car loan on your FICO score.

Best ways to improve your score:

1. Never pay late

2. low util PIF (FICO score game)

3. Dont apply for too much credit.

4. Despute wrong derog information on your credit report.

5. Never pay late

Message Edited by marty56 on 01-04-2008 04:28 PM

[Amie]

Paying it off early.  Only by 4 months.

[haulingthescoreup]

Hi, Amie, welcome to the forums!

When it comes to paying off your loan, usually it wouldn't hurt, but if it's your only installment loan, you might lose more points for no longer having an open loan in your credit mix. Dumb, but there it is. Do you have an open mortgage, student loan, or any other installment loan? If so, I don't think you'll lose but a few points for paying off the loan, and financial good sense is important, too!

Your best bet will be to do as the others say and pay down your cards to under 10%. And for a maximum boost, pay the two smaller cards off completely, and let only the $2K card report. And Lordy, no, don't close them!

If your payment history is clean on your cards, you might consider asking your CCC's for CL increases once you pay down what you have. A lot of lenders are freaking out these days, so I would definitely have your util down before asking. And you want to be sure that they will do it without a hard inquiry on your reports, ouch.

Do you know about how to pay your cards down or off before they report balances to the credit bureaus? Just paying a couple of weeks early can bump your scores up nicely.

Don't know if you've done this yet, but please read Credit Scoring 101:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

You'll have a much better understanding of how credit works, and why it would be an awful, awful idea to close your existing cards!

[Gotagoal]

Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

[Timothy]

Yep - Kuddos to HTSU

It helps she types 60-80 words per minute.

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Gotagoal wrote:
Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

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[haulingthescoreup]

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Timothy wrote:
Yep - Kuddos to HTSU
It helps she types 60-80 words per minute.

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Gotagoal wrote:
Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

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Wow, thank you both! Although the words-per-minute is significantly hampered when the 12-pound cat decides to lie on my left arm.

[miguelon]

Hi, the whole credit score system is quite new for me since I've just arrived to the US, and so I have opened a checking account and have deposited 900$, and the only way to get a credit card was to request a secured credit card with CL 800$, so I need to know; What would be my starting credit score? How do I increase this credit score? Where should I request credit cards? If I ask for a car loan, should I do it, at the Bank itself or by a dealer? would it be denied?

Appreciate your help,

Miguelon 

[wmarat]

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miguelon wrote:

Hi, the whole credit score system is quite new for me since I've just arrived to the US, and so I have opened a checking account and have deposited 900$, and the only way to get a credit card was to request a secured credit card with CL 800$, so I need to know; What would be my starting credit score? How do I increase this credit score? Where should I request credit cards? If I ask for a car loan, should I do it, at the Bank itself or by a dealer? would it be denied?

Appreciate your help,

Miguelon 

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Regarding Autoloan. From experience a bank may offer lower APR but if you apply to bank you probably will be denied. Dealer, however, will approve you but you'll get outrageous APR. Check out your local CU. I had chosen to buy my first car in the States in cash, it was much cheaper.

Forget about FICO for at least 6 mos, better off for 9 mos. Let your secured card to graduate to unsecure. Be patient, patience is a virtue and never, but never be late.