Why is my credit score so low, very frustrating process!

[Anonymous]

Hi everyone, need some help from you experts out there.  I've been working on improving my credit for 5 years but my score is still much lower than I thought it would be. 

Any suggestions?

Here are my particulars:

Credit Line #1 - Fixed loan $1,000, Prosper.com, balance $415 (paid off two Prosper loans prior to this).

Macys Card - $0 Balance

Visa #1 - $240 balance.  Credit line is $2,500

Visa #2 - $290 balance. Credit line is $3,000

Homeowner, 100% equity, paid in full. 

Automobile: Paid Cash

income: $62,000

Fixed Expenses: $1,600 for food, gas, real estate tax, insurance, utilities (no rent or mortgage, own my property free and clear), etc.

Discretionary Income: $1,500 a month (savings, 401k, vacation, investments)

I don't like using credit so I paid everything in cash until 2006 when I decided to establish a credit history (as I may need a loan to pay for kids college, just in case).

So I got several credit cards and a small line of credit from Prosper.com.

History:

Perfectly clean credit record for past 7 years (I didn't start using credit until 2006, so really 6 years).  Not a single late payment, no judgements, liens, past history of bankruptcy, nothing.  I've never defaulted on a loan.    Payments are made well before the due date and I keep my balances at 10% utilization for maximum scoring.

Sounds wonderful right?  Well...I went to check my score and it was 620!  I would think it should be at least 700-750 by now.  There is nothing negative on my report.

I don't know what else to do to bring my score up, I've already established a perfect 6 year history and paid off 2 small term loans two years ahead of time. 

It is much harder to get a better rating due to the economy, maybe I need a 10-15 year history before it will go up?  Back in 1982 when I first established credit my rating went up much faster, so I'm very discouraged.   

Thanks.

[IOBA]

Hi, someone with more to say will be along shortly....

Meanwhile, to me, your credit file looks thin.   This could be affecting your credit score.

Your utilization with the cc's is just a tad (barely a tad) over the 9% number.  Getting that down will help.

The house paid off, the car paid off --- is great!  But not much of a positive impact on your credit score.   You can acheive a credit score of 800+ without car payments and car payments (I have).

My suggestion would be to apply for a new cc - try to slowly thicken the file.

[pizzadude]

----->   Sounds wonderful right?  Well...I went to check my score and it was 620!  I would think it should be at least 700-750 by now.  There is nothing negative on my report.

I'm a little suprised that you have such a low score if there really is nothing negative on your credit reports.   Have you checked all three CRAs ?  Also, where did you pull your score from ?

[llecs]

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pizzadude wrote:

Also, where did you pull your score from ?

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+1

[crunching_numbers]

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@pizzadude wrote:

----->   Sounds wonderful right?  Well...I went to check my score and it was 620!  I would think it should be at least 700-750 by now.  There is nothing negative on my report.

I'm a little suprised that you have such a low score if there really is nothing negative on your credit reports.   Have you checked all three CRAs ?  Also, where did you pull your score from ?

---

+1

[Anonymous]

Thanks for comments.

Not enough credit lines, I can increase that, I was worried about inquiries and additional requests lowering my score but I guess it bounces back after a while.

I used an offer with my credit card to tracks all 3 major services for $9.99 a month.

The odd part is how the score jumps around all the time, from one day to the next it can change quite a bit.  The highest score I had was 691 on one of the services about a year ago.

I was told that credit utilization is optimally at 30% (from Discover) but someone else told me to get it under 10% so I brought all the balances down immediately.  I can imagine a small boost from that but not more than 10-15 pts. 

One other question.  When I bring my balances down does it take about a month or so before it is reflected in my report? 

[llecs]

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@Anonymous wrote:

I used an offer with my credit card to tracks all 3 major services for $9.99 a month.

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That can be good. That service doesn't offer FICO scores. That's why we ask. Your FICO scores could be higher. Who knows. As of a couple of years ago, Experian took the step to block consumers from accessing their FICO score in an effort to promote and sell their own scores, which lenders do not use. Whenever there's a post saying they pulled all 3 reports with scores (or even score), then it's clear that it isn't a FICO.

[pizzadude]

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@Anonymous wrote:

Thanks for comments.

Not enough credit lines, I can increase that, I was worried about inquiries and additional requests lowering my score but I guess it bounces back after a while.

I used an offer with my credit card to tracks all 3 major services for $9.99 a month.

The odd part is how the score jumps around all the time, from one day to the next it can change quite a bit.  The highest score I had was 691 on one of the services about a year ago.

I was told that credit utilization is optimally at 30% (from Discover) but someone else told me to get it under 10% so I brought all the balances down immediately.  I can imagine a small boost from that but not more than 10-15 pts. 

One other question.  When I bring my balances down does it take about a month or so before it is reflected in my report? 

---

You need to check your FICO scores to see where you stand ~ the FAKO scores you received are no indication of what your FICO score is, they can't be correlated.

Also much of the non~FICO scoring advice out there isn't helpful, such as the comment about 30% utlization.    Ignore that advice and focus on the FICO scoring advice that comes with the score.

[llecs]

As far as improving credit, here are some ideas:

1) I think your are fine with your mix of credit. You have enough credit. In fact, you can easily hit into the 800s with what you have already in terms of mix. There might be other things in the background that could be hindering your score. And maybe your FICO scores are in the 700s already. We don't know. But I wouldn't open anything new up. I bet you'd see a net loss if you did so, with much or all of those point returning within a year. In other words, if a higher score is the goal, then avoid new credit.

2) You might creak a few more point by paying one of those Visas off. Ideally, get all of your accounts to $0, except for one, and get that one under 9% of the CL. So get the remaining down a tad more.

3) Income, assets, and non-reported expenses don't factor into FICO. Even a billionaire can have a low FICO score.

4) A 6-year history is young. Let that age and you'll see improvements over time.

5) Loans are a tiny part of FICO scoring. IMO, don't mess with them per improving credit.

6) Pull your FICO scores to have a better understanding of how FICO sees your credit. It'll list out each account and tell if it has a major impact on your score. It'll alos list the pos/neg reasons of items that help or hurt your score.

7) When you pay a CC, that CC company will not report that new balance right away. Most creditors will only report 1x/month and will typically report the balance you had on the statement date and will report that balance 1-3 days or so following that statement date. There are a couple of oddball CCs out there that report differently.

[Walt_K]

Also, regarding optimal utilization, what typically works for most people is to have all cards but one report a $0 balance.  For the one card that reports a balance, you want 9% or less of that card's credit limit (not total CL) to report.  Again, this is what works for most people, but it's a good starting point to tinker around from there.

Still, that is only going to help you gain a few points given where your utilization is.  As others have said, you're likely not looking at your FICO scores.  You should check  your FICO score, you might be in for a pleasant surprise.