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Established Member
Posts: 11
Registered: ‎09-24-2010
0

New Line of Credit to improve FICO?

Hello All,

 

     First of all, thank you for your time in reading my question.  I am looking to lease/buy a vehicle in Jan 2011.  In the meantime, I have paid off several of my negative debts and according to my TransUnion report there is an inquiry and 2 other very old negative items that will be falling off.  I know this will improve my FICO score, however, I was wondering if it would be wise to take out a secured/unsecured line of credit in the meantime, while waiting to get my car.  I know that initially this may hurt my score, but is it wise to think that maybe a few months of on-time payments and and increase in my debt to credit ratio may help?  Any suggestions would be greatly appreciated.  Thank you!

 

Wesley


Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


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Epic Contributor
Posts: 20,528
Registered: ‎03-19-2007
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Re: New Line of Credit to improve FICO?

Is it an installment loan, or a revolving line of credit?

On the negative side, it will of course cost you a new inquiry, and reduce your average age of accounts.

On the postive side, IF it reported as revolving credit, it may improve your revolving CL, and thus reduce your overall % util.

 

Established Member
Posts: 11
Registered: ‎09-24-2010
0

Re: New Line of Credit to improve FICO?

It is a revolving line of credit with a local credit union.

Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


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Epic Contributor
Posts: 20,528
Registered: ‎03-19-2007
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Re: New Line of Credit to improve FICO?

In very rough terms, I would expect a hit of around 5 pts from the new account and reduction in AAoA.

In my opinion, it would take an increase of close to 20% in your overall CL to offset this in the short term.

So, the factor for me, would be the amount of the additional CL this new LOC will report.

Established Member
Posts: 11
Registered: ‎09-24-2010
0

Re: New Line of Credit to improve FICO?

The line would be <1000

Starting Score: EQ 563 TU 523 EX FAKO 573
Current Score: EQ 601 TU 633 EX FAKO 606
Goal Score: EQ 750 TU 750 EX FAKO 750


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Epic Contributor
Posts: 20,528
Registered: ‎03-19-2007
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Re: New Line of Credit to improve FICO?

If your current, total CL is now at least $5K, my vote would be not to open it.

Established Member
Posts: 22
Registered: ‎07-25-2010
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Re: New Line of Credit to improve FICO?

I recently opened a CC  with my credit union; it has a $1500 credit limit.  My only other CC I have has a $300 limit.  I have 0% utilization; will opening this new account improve my score since my CL was so low before?


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Current Score: June 2013 EQ 744 TU 705 EX 750
Goal Score: 12/13 > 720


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