Need help improving already good credit

[Anonymous]

[b]Hello all[/b]

Two years ago, I had a credit rating of 792.  I then took out a 3-year business loan for $25,000.00 that I paid off in 11 months.  Last year, I paid off a 5-year car loan in 3 1/2 years.  I also paid approximately $30.000.00 in various credit card debts as well.  Today, I have one credit card with no balance and my credit is 727!?! 

I'm mystified by this as I've proven myself to be extremely finanicially responsible since establishing credit 18 years ago - particularly over the last couple of years yet my credit has dropped by 65 points. 

First of all, what kind of backward logic are the credit agencies using to punish me for being more responsible that the majority of people and what can I do to quickly restore my credit to where it was two years ago?

Any help would be appreciated.

[PayingTheBills]

You had a 792 AND $30,000 in credit card debt???

You score will be decreased if your average age of your accounts is decreased, either by opening new accounts or closing old accounts.  You obviously opened at least one account.

Did you close any accounts?

[ScoreBooster]

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@Anonymous wrote:

[b]Hello all[/b]

Today, I have one credit card with no balance and my credit is 727!?! 

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If it's reported as zero balance, you aren't getting the highest score. Although you're not supposed to max out your card, FICO wants to see some credit-usage. Let them report a balance between 1 and 3% of your credit-line and you might see an improvement. I doubt the lower average age of accounts alone has such a negative impact.

[Anonymous]

Thanks for your reply!

The credit card is used for business expenses.  It is constantly being used but is also constantly being paid off.  Subsequently, I charged and payed over 30k last year alone. 

I opened two accounts, which offered interest-free periods.  The six month interest-free card had an 8k balance, which was paid off in six months.  The 15-month interest-free card had an 11k balance, which was paid off in 9 months.  If anything, I should have been recognized for my responsibility in paying these off well within their grace periods and as a result, my credit score should have risen.  Instead, it has dropped to 727.  I still don't get it.

[Anonymous]

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@ScoreBooster wrote:

If it's reported as zero balance, you aren't getting the highest score. Although you're not supposed to max out your card, FICO wants to see some credit-usage. Let them report a balance between 1 and 3% of your credit-line and you might see an improvement. I doubt the lower average age of accounts alone has such a negative impact.

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Thanks for your input.  I will do that. 

Here's what's weird.  Two individuals with the exact same credit history and rating have one credit card each.  One has a credit limit of 20k but only has a 1k balance.  The other guy decides to lower his 20k limit to 5k because he doesn't really need the extra line of credit, but keeps a 1k balance as well.

The end result is that the 2nd guy will have his credit rating dropped for doing the responsible thing of living within his means.  The first guy, who could potentially owe 20k the very next day, gets rewarded with a stellar credit rating.

That's *ss backward logic if you ask me.  I always thought that potential debt mattered but apparently it's not that cut and dry.  Consequently, I just requested a limit increase on the card despite the fact that I absolutely no longer need a card with a 20k limit....lol...

[RobertEG]

I think the answer is clear, at least to me.  You took on a whopping amount of credit in the past few years.

I think your score is great now, havving paid most of it off.  But your initial score hit occured a few years ago, and relying on what it was before that time is not the baseline of recovery since then.  You cant use that as the baseline.  FICO is today, not yesterday.

I would also disagree somewhat with the advice to keep some balance on all cards.  Part of FICO is the number of cards reporting monthly balances.  Throw a BigMac on the CC every three or four months, but I dont think FICO is rewarding you at all for showing nonthly balances on each account.

[ScoreBooster]

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@RobertEG wrote:

I would also disagree somewhat with the advice to keep some balance on all cards.  Part of FICO is the number of cards reporting monthly balances.  Throw a BigMac on the CC every three or four months, but I dont think FICO is rewarding you at all for showing nonthly balances on each account.

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True in general, NOT in this case. He stated he only has ONE card, so your scenario doesn't even apply. I didn't suggest to carry a balance on "all cards" - how could I since it was stated there was only ONE?

If he only has this card, a zero balance reported DOESN'T result in the highest FICO possible. That's a fact.

In general, I always suggest that members add all their CC credit-lines and use between 1-3% of their TOTAL available credit on only ONE card - that takes care of the number of accounts with balances AND delivers the required usage.

However, in this case with only one card, I do believe I gave the correct advice. I assume you know that as well and simply missed the part where it was mentioned that only one card was in the play.

Message Edited by ScoreBooster on 01-30-2009 04:08 PM