How do I push that needle over 740???

[Anonymous]

So, I FINALLY HAVE A CRDIT SCORE!! WOOHOO! After moving to the US in October I was finally able to generate a FICO score today.

EQ 711 (myfico) EX 701 (from experian). Don't know my TU score. My FICO 5 score for EQ is 689 according to myfico.

Goal now is to move my score over 740, as that is where I understand top tier credit starts? Here are my specifics:

RBC Bank Visa - Aug 2014 (7 months) - $0 balance / $11k limit, - OLDEST ACCOUNT ("7 months" says EX)

Amex blue cash - Nov 2014 (4 months) - $4300 balance / $10k limit

BoA cashback - Nov 2014 (4 months) - $2400 balance / $12k limit

FirstTech CU visa - Jan 2015 (2 months) - $0 balance / $5k limit

Experian says my AAoA is 4 months.

Total $6700 balance on $38000 credit, 18% util, but over 40% on my Amex. I pay in full every month and don't carry a balance, current util is high because I went furniture shopping this month, but that was planned and I have the funds to pay it in full, so utilization will drop to probably 8-9% next month.

Inquiries:

5@EX incl 1 rental app; oldest inq BoA in Nov.

3@EQ incl 1 cellphone app; oldest t-mobile in October

2@TU, oldest Amex in Nov

I have no late payments or any other negatives on my file - obviously my problem is that my file is short, and this month I have a higher than usual utilization. 

What myfico says about my Equifax score: "POOR - length of credit history" and "POOR - Amount of new credit".

I did do a few stupid things: I CLI'd both Amex and BoA shortly after getting the cards, but before I read this forum, and only for $2000 in each case, so I probably can't CLI either of them again for the next while. I also have two spurious INQ's from stupidly app'ing a Chase card I really had no chance of getting.

So really my question is what does it take to move the needle over 740? As I see it the questions are:

1. How much impact will reducing my utilization from 18% to say 4-5% have?

2. Some of the inquiries are getting near 6 months, does that matter? When will I start to see those diminish?

3. My newest account is only January, how quick does new account penalty fade?

Thanks in advance!

[Erusidhion]

   Pay down all your balances on every card and leave about 1-9% on one. I think you're very close. I was at a 720/730 with only two secured cards after six months of credit history reporting. I think if you do the above you're going to be right on the finish line. You may need to age your newest account up to 6 months. It's going to be very close. Congratulations on starting your credit journey! I carry balances currently because I've been catching up on a lot of vehicle repairs, house furniture, clothes; basic needs that I've ignored for awhile.

    But I'm finally in pay down mode and I hope to have a credit score of 740+ myself in the end. After I hit 740+ I'll probably pick up a couple more cards that I'm missing like a Citibank, Barclays and get my Starter Credit Card from my credit union upgraded into a normal CC with a higher limit. I'm also seeking to get a Personal Line of Credit. I think that's my goal for 4th quarter of this year. Again good luck! You're doing great!

[jamie123]

These are my suggestions:

1. You have enough credit cards at the moment. Adding more credit cards now will only drag your scores down and you will probably get low CLs because you have so much new credit. Credit considered "new" has no hard and fast rules and varies by lender. A card that is less than 6 months old is considered new by most every lender. It is considered less new at 1 year and not new after 2 years.

2. You should open a savings account at Alliant Federal Credit Union and get a $500 shared secured loan now. It will give you extra points for having a mix of credit. It will also make you look much better to future lenders because you will then have installment loan history on your reports.

Besides the shared secured loan you need to sit back, relax, pay your bills on time and plan for your next credit move which should be no sooner than when your first credit card turns 1 year old.

[Anonymous]

OK. When myfico rates me "POOR - Too much new credit" how is that actually measured?

Plainly I do, but after how long in the garden can I expect to see that effect diminish?

And for the sake of argument, if I get to 740 and then app an Amex charge card, what does that do? I get another inq, but does the MSD thing mean I would avoid the new credit penalty?

[jamie123]

You are in a great spot right now. You have several credit cards with good credit lines. You need to just have some patience and your scores will grow. Adding extra credit right now will make your scores go down and not up.

The "Too much new credit" message is telling you to slow down. The "Too much new credit" message might take a year or two to go away.

FICO will always give you messages as to what is keeping your scores down no matter how high your scores get. Once you get rid of the "Too much new credit" message it might change to "No installment loan history" or "Balances too high" or "Too many cards reporting balances". Don't worry, they will always think of something as to what is holding your scores down. Don't get too upset about it.

You have to think of your long term goals when building credit and decide where you want to end up and devise a plan that will get you there as fast as possible.Fast as possible will take at LEAST two years but more probably 3 to 4 years. It could take even longer if you make any mistakes along the way.

In most people's case you want to end up with 5 to 8 top quality credit cards from the so called "prime" banks that you can keep open for the rest of your life. The so called prime banks are:

AMEX

Bank of America

CitiBank

Chase

Discover

Wells Fargo

Building a good rock solid credit score MUST take 2 things into account. You need to app and get credit cards to establish your credit history and scores but every time you get new credit, it will knock your scores down for 6 months to a year.

Most of the prime banks will not approve you for their best cards until you have at least 1 year of history managing at least 2 credit cards. You already have 2 prime bank cards so are doing much better than most people are able to do. I assume you must have a great income. Having a good income will help you along in this journey because banks will lower their standards a bit for high income individuals.

The average age of your accounts needs to get above 2 years for your credit to be considered seasoned. That is why you are getting the "Too much new credit" message.

If you app for an AMEX charge card you would probably get it. AMEX likes for their customers to have a charge card along with their credit cards. Your scores will take a slight hit that will last for 6 months to a year.

You should try to put at least 6 months or a year between new credit applications if at all possible. I know you are just starting out and getting those 4 cards together at the start is great and the thing to do, but you need to slow down now.

[Anonymous]

I was able to get the cards I have based on relationships and based on my Canadian credit history. Amex has an international transfer program and they transferred over my Canadian Amex cards over to the US. I love Amex for that, anyone who ever thinks they might move to a new country should get an Amex or is a great help.

The RBC Bank is a wholly owned subsidiary of my Canadian bank so they extended that to me based on my Canadian credit history. The BoA was initially declined but the local branch overrode the decline based on their relationship with my employer. And the FirstTech CU is also based on their relationship with my employer.

So I was lucky to be able to leverage all that.

I will do nothing until my score hits 740, then likely app an Amex charge card. Then do nothing until my score gets back to 740.

Sounds like I have at least an eight month wait if I have to wait until my AAoA is over a year.

[takeshi74]

As always building/rebuilding takes time.  You can max out all the factors you can tweak but a number of factors just take time and responsible usage.  Be mentally prepared to be in this for the long haul.